CFPB clarifies pre-foreclosure notices; Larry says goodbye

by. Henry Meier

It’s going to be a great week for bloggers everywhere when it starts with news about clarifications to the CFPB’s mortgage regs and the news that Larry Summers is withdrawing his name from the running as the next Chairman of the Federal Reserve Board.

First, for you compliance folks, late Friday afternoon the CFPB released amended regulations clarifying some subtle but crucial vagaries on issues ranging from when foreclosures may commence to credit life insurance.

Most importantly, for New York’s purposes, we can now breathe a sign of relief that we will not have to wait 210 days before starting a foreclosure.  Remember that under New York Law, you already have to send out a notice 90 days prior to commencing a foreclosure action warning home owners that they are in danger of losing their home.  When they take effect in January, the CFPB’s regulations (1024.4(f)) prohibit a lender from taking any legal steps triggering foreclosures for 120 days.  As drafted, the language raised concern, including on the part of New York State’s Department of Financial Services, that lenders would have to wait 210 days in order to comply with both federal and state statute.

In language that is as clear as mud, the CFPB explains to us that a pre-foreclosure notice required by state law doesn’t trigger the 120 day requirement simply because it later has to be included in the summons and complaint starting the foreclosure process.  The bottom line is that New York State’s already interminably long foreclosure process won’t be made any longer because of a conflict between state and federal law.

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