Struggling to Make Mortgage Payments? New Rules Could Make It Easier to Get Help | Mortgages

Those struggling to make their mortgage payments may be able to avoid foreclosure by applying for assistance programs through their lenders. The catch is that it isn’t always easy to apply.

“It’s one of those things where you feel like you need a training course to go through the paperwork,” says Tomeka Lynch Purcell, CEO of mortgage brokerage PMG Worldwide.

That could change soon, though. The Consumer Financial Protection Bureau has been working on an update to its Regulation X that would streamline the process of applying for assistance.

“It’s really well intended,” says Chris Parks, sales manager with Churchill Mortgage. “It’s designed to help keep people in their homes.”

The CFPB accepted comments on the proposed rule in 2024 and was expected to issue the final rule in August 2026. That month has come and gone, leading some to wonder if the current administration is making some tweaks.

In 1974, Congress passed the Real Estate Settlement Procedures Act to create protections and disclosures for borrowers. Regulation X implements the provisions of the law, and its oversight was transferred to the newly created CFPB in 2011, following the financial crisis and foreclosure crisis.

“Regulation X is really designed to be a safeguard for consumers,” Parks says.

Still, some of its provisions can be onerous. For instance, it requires completing an application before a mortgage servicer can begin reviewing loss mitigation programs for a struggling borrower.

What’s more, borrowers generally must submit a complete loss mitigation application at least 37 days before a foreclosure sale to receive certain protections under Regulation X.

“There is a somewhat stringent application process. Everything needs to be in place,” says Victor Baev, chief investment officer for E1 Capital. “They are looking to relax that.”

“You no longer have to have a full application to be considered for loss mitigation,” says Bill Lyons, founder and CEO of Griffin Funding. “The goal is that people don’t end up in foreclosure because of the paperwork.”

Not having to submit a completed application may seem like a small thing, but it’s not.

“When you get behind, you contact your servicer and say I need help. The next step is (they) send you a loss mitigation packet,” Purcell says. “It’s a huge packet, (and) you’re still in foreclosure.”

That means that you are still receiving notices, calls and door knocks about the foreclosure while trying to navigate your way through what could be 200 pages of paperwork.

Parks says people are often “shell-shocked” by the foreclosure process. Even in the best of circumstances, completing a lengthy application can feel intimidating. For vulnerable populations, such as those with limited literacy skills, it can seem like an impossible task.

Under the proposed changes, a borrower could begin the loss mitigation process by notifying their servicer that they need help, without first submitting a complete application.

“I think it will make a huge difference on the consumer and your bank,” Purcell says. “They don’t want your house.”

By streamlining the application process, banks and other lenders may be able to move homeowners more quickly into a program that helps them avoid foreclosure.

Beyond streamlining the application process, the proposed changes to Regulation X direct lenders to consider all available forms of assistance for a borrower.

Instead of reviewing an application only for a loan modification, for instance, a lender would also look at whether a forbearance, deferral or other option would be best.

While the proposed revisions to Regulation X are intended to help consumers, there could be drawbacks.

“As with any new law, there are unintended consequences,” Lyons says. If loan servicers need to hire additional staff or implement new systems to handle loss mitigation requests, that could result in higher mortgage costs for consumers. “That would be my biggest fear.”

There are also limitations to Regulation X. For instance, it doesn’t apply to investment properties and exempts small servicers, according to Lyons.

The initial rule change was drafted under the Biden administration, and some question whether all its provisions will make it into the final rule.

“I know they were looking to incorporate additional languages,” Baev says. However, he’s not sure if the current administration will continue with that effort.

While the proposed changes to Regulation X will make it easier to apply for assistance, they don’t actually change or expand the programs available to homeowners.

Some would like to see more emphasis on education and early intervention. Baev suggests more disclosures to let homeowners know about assistance options, while Parks thinks Q&As or resources from a source independent of lenders would be helpful.

“If we are able to catch it early on, then we can avoid getting to the loss mitigation process,” Purcell says.