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Under the new guidelines, servicers must alert mortgage borrowers who miss two consecutive payments and spell out options, such as changing the interest rate or extending the terms of the loan, that could help borrowers avoid foreclosure.
The rules preempt quick foreclosures by requiring servicers to wait until a loan is delinquent more than 120 days before beginning foreclosure proceedings, the bureau said.
Servicers have to implement the rules by next January. And small ones – managing fewer than 5,000 loans, like community banks – will be mostly exempt from the new rules.