by Brian Wolfman
The CFPB cop appears to be on the beat.
Today, the Consumer Financial Protection Bureau published a bulletin
advising mortgage companies about their legal obligations to protect
consumers during loan transfers between mortgage servicers. CFPB is telling mortgage companies that, when handing off the processing of loans, mortgage servicers should not lose
paperwork, lose track of a homeowner’s loss mitigation plans, or underimine consumers' opportunities to save their homes from foreclosure.
The CFPB issued the bulletin now, it seems, because the agency "has a heightened concern about these practices given the large
number and size of recent servicing transfers."
The agency's press release quotes CFPB Director Richard Cordray as saying that "[c]onsumers
should not be collateral damage in the mortgage servicing transfer
process. This guidance directs all
mortgage servicers, both banks and nonbanks, to follow the laws
protecting borrowers from the risks of such transfers, and makes clear
that we will be monitoring them for compliance." The press release notes that "[m]ortgage servicing transfers
are common and occur when a mortgage owner sells the right to service
its loans or when the owner outsources the servicing duties. These
transfers can be logistically challenging. A transaction could involve
the moving of hundreds of thousands of loan documents." The agency also explains that servicing transfers can benefit consumers when "nonperforming servicers … transfer rights to specialty companies that offer better service."
The full bulletin lays out all of the agency's concerns, the legal bases for mortgage servicers' obligations and any enforcement actions that the agency may take, and the expected focus of future CFPB examinations of mortage servicing companies.