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Over the course of the past few years many homeowners in the Miami area found themselves underwater on the mortgages. When some of those homeowners found it difficult to make the monthly payments and were unable to sell for the price they paid, they found themselves facing the reality of losing their home through foreclosure. While there are several options out there to try and stay in one’s home, it is likely that not all were aware of them.

Recently new rules for mortgage servicers were unveiled by the federal government. Slated to actually go into effect in 2014, the idea behind the new rules is that the homeowners will be better educated in what is going on throughout the process. There are a variety of things that it addresses, some of which we will highlight here.

One change is that foreclosure proceedings will not be commenced until after all attempts to secure a mortgage modification are exhausted. Additionally, a foreclosure sale cannot take place until 37 days after a loan modification has been applied for.

Another change is that a servicer must provide information regarding available options that can be pursued to avoid losing a home via foreclosure. The options must be provided to the homeowner in writing. Similarly, the information regarding mortgage payments needs to be clearly laid out to homeowners. Information on fees and warnings about changes in interest rates must also be clearly provided along with information regarding counseling if the rate hike is too high.

The hope is that these changes, along with others, will take some of the power away from mortgage servicers and give it back to the homeowners. Whether it will do so, remains to be seen.

Source: CNNMoney, “New rules aim to protect homeowners from foreclosure,” Les Christie, Jan. 17, 2013