RESPA Loss Mitigation
Consumer Financial Protection Bureau (CFBP)
After the “mortgage bubble burst,” the Real Estate Settlement Procedures Act (RESPA) implemented an entire section (Regulation X section 1024.41) devoted to “loss mitigation.” The purpose of this section is to allow struggling homeowners to recognize and hopefully remedy their mortgage default before it ends in foreclosure. While nothing in this section imposes a duty on a servicer to provide any borrower with any specific loss mitigation option, it does require lenders to accept applications for loss mitigation and work with any qualifying applicants to rectify the problem.
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