The recently established - and routinely controversial - Consumer Financial Protection Bureau has unveiled a program to review banks' procedures for informing homeowners of their options to avert foreclosure. The agency will also ensure that illegal fees are not being levied on borrowers undergoing loan modifications.
Millions of foreclosures have been declared in the wake of the 2008 financial collapse. The subprime lending trends that inflated the housing market in the years leading up to the breakdown are expected to afflict the residential real estate market well into this decade. Amid these concerns, regulators are reviewing reports of foreclosure-documentation errors by big banks, as well as stalled application procedures for many troubled borrowers who have sought to modify their mortgages and avoid foreclosure, according to MarketWatch. "With all the structural problems, it is no surprise that the mortgage-servicing market has been plagued by pervasive and profound consumer protection issues," Raj Date, special adviser to the Treasury for the CFPB, told the source. The CFPB is only beginning to take the reins, but experts assert that the scope of its regulatory powers is extensive. Outlined in the Dodd-Frank Wall Street Reform Act, the agency is granted authority to examine any bank and credit union that has assets of more than $10 billion.