WASHINGTON, D.C. (WKOW) -
The federal government plans to propose new rules Tuesday that will give homeowners more ways to avoid foreclosure.
Congress mandated changes in the rules covering mortgage services after the 2008 financial crisis, but the Consumer Financial Protection Bureau's proposed rules would require mortgage servicers to give all borrowers standardized monthly statements and warn borrowers about interest rate or insurance changes.
The mortgage servicers would also be required to make "good-faith efforts" to contact borrowers at risk of foreclosure and provide options to avoid losing their homes. There are also stipulations for improving record-keeping and providing foreclosure counseling to those who need it.
The agency said it will formally propose the rules this summer and finalize them by January 2013.
Nearly eight million Americans have faced foreclosure since the housing bubble burst in late 2006.
Many homeowners have said companies that process mortgages failed to verify information on foreclosure documents. The worst practices, known collectively as "robo-signing," included employees signing documents they hadn't read or using fake signatures to approve foreclosures.
In February, the nation's five largest mortgage lenders agreed to overhaul their mortgage servicing practices and pay $25 billion to U.S. states to help those who lost their homes or face foreclosure.
A mortgage servicer collects payments from the borrower on behalf of a loan's owner and typically handles customer service, escrow accounts, collections, loan modifications and foreclosures.
