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27 October 2024 ยป F I V E S T A R C O N T R I B U T O R S P O T L I G H T tinuous period starting when a borrower requests loss mitigation assistance, pro- vided such a request is made at least 37 days before a foreclosure sale. This cycle continues until a servicer implements a solution that brings the borrower's loan current or satisfies one of the procedural safeguards. The rule also broadens the scope of what constitutes a "request for loss mitigation assistance," ensuring that any communication from a borrower, oral or written, through customary chan- nels, can trigger the procedural protec- tions against foreclosure. Prohibition on Dual Tracking and Additional Fees T he rule explicitly prohibits the practice of dual tracking, mandating that foreclosure activities cease as soon as a borrower requests loss mitigation assistance and continues throughout the entire review cycle. Moreover, with the exception of late fees, servicers would be barred from accruing additional charges or penalties during this period, which could result in servicers bearing the cost of third-party services related to delin- quency management, such as property inspections. Language and Communication Requirements I n recognition of the diverse linguistic needs of borrowers, the proposed rule requires servicers to provide translated communications in Spanish and other languages, both in written and oral form, upon request. This provision extends to borrowers who were marketed loans in a language other than English, ensuring they receive relevant loss mitigation com- munications in the same language. Conclusion T he proposed rule, if adopted, would significantly enhance the obliga- tions of mortgage servicers in assisting distressed borrowers by requiring them to exhaust all loss mitigation avenues be- fore proceeding with foreclosure. It also aims to provide borrowers with meaning- ful opportunities for relief but may also impose additional costs on servicers and potentially delay foreclosure proceed- ings, thereby affecting the enforcement of mortgage obligations. Considering that these are the first substantial revi- sions to the Mortgage Servicing Rules in eight years, the proposed rule could lead to significant shifts in industry practices, necessitating the investment of time and resources as servicers work toward com- pliance with the new requirements. With the public comment period still open, it is crucial for servicers, investors, trade associations, and their counsel to thoroughly review the CFPB's proposal to assess its potential impact on their operations. Additionally, these parties should strongly consider whether they should contribute public comments or provide data that could assist the CFPB in refining the amendments to Regulation X. Submitting comments could be a vital step in ensuring that the CFPB receives the necessary feedback on the proposed rule and its calls for data and other pertinent information. The CFPB's call for comments reflects the agency's ongoing efforts to balance borrower protections with industry concerns and it is anticipated the CFPB will take several months to review public comments and make revisions before issuing the final rule later this year or in early 2025. The implementation of the Regulation X changes is expected to become effective nine to 12 months following the finalization of the rule. "The proposed rule introduces significant procedural safeguards that activate upon a borrower's request for loss mitigation assistance."