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The CFPB Protects Struggling Borrowers During Servicing Transfers

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The CFPB Protects Struggling Borrowers During Servicing Transfers

When mortgages are transferred from one servicer to another, borrowers who had applied to the prior servicer for loss mitigation assistance may not know where they stand with the new servicer. If the borrower’s application was complete prior to the transfer, the new servicer generally must evaluate it within 30 days of when the prior servicer received it. 

The new servicer has 15 days after the transfer date to evaluate a complete application. If the new servicer needs more information in order to evaluate the application, they must inform the borrower in writing and in the meantime all foreclosure activity must be put on hold. 

The CFPB guidelines currently prohibit a servicer from proceeding to foreclosure once they receive a complete loss mitigation application from a borrower more than 37 days prior to a scheduled sale. 

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