CFPB Issues Bulletin to Prevent Runarounds in Mortgage Servicing Transfers
On August 19, the Consumer Financial Protection Bureau (CFPB) issued Bulletin 2014-01 titled Compliance Bulletin and Policy Guidance: Mortgage Servicing Transfers.
CFPB Issues Bulletin to Prevent Runarounds in Mortgage Servicing Transfers
Bureau Highlights Risks in Transferring Loans Under Loss Mitigation Review
Washington, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) is releasing a bulletin outlining expectations for mortgage servicers that transfer loans. The bulletin includes information on how mortgage servicers should pay special attention to new rules protecting consumers applying for loss mitigation help or trial modifications.
“At every step of the process to transfer the servicing of mortgage loans, the two companies involved must put in appropriate efforts to ensure no harm to consumers. This means ahead of the transfer, during the transfer, and after the transfer,” said CFPB Director Richard Cordray. “We will not tolerate consumers getting the runaround when mortgage servicers transfer loans.”
The bulletin is available at: http://files.consumerfinance.gov/f/201408_cfpb_bulletin_mortgage-servicing-transfer.pdf.
Mortgage servicers are responsible for collecting payments from mortgage borrowers on behalf of loan owners. They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. Generally, borrowers have no say in choosing their mortgage servicers. Servicing transfers among servicers are common and may occur in several ways. The mortgage owner may sell the rights to service the loan. In some case the owner of the loan may hire a sub-servicer rather than servicing the loan itself.
In January 2014, the CFPB’s new common-sense mortgage servicing rules took effect. The rules protect mortgage borrowers from runarounds by their servicers. Servicers are now required, for example, to maintain accurate records, promptly credit payments, and correct errors on request. Among other things, the new regulations also require servicers to maintain policies and procedures to facilitate the handover of information when a servicer transfers a loan to a new company.
Today’s bulletin gives examples of some things CFPB examiners will look for when loans are transferred. In particular, CFPB examiners will carefully scrutinize transfers of loans with pending loss mitigation applications or approved trial and permanent modification plans. Examples of good practices by servicers include flagging those loans and taking special care to ensure that all relevant documents are transferred in a timely manner.
If servicers are not fulfilling their obligations under the law, the CFPB will take appropriate actions to address these violations and seek all appropriate corrective measures, including remediation to harmed consumers.
Throughout 2013 and 2014, the CFPB has been working to ensure a smooth industry transition to compliance with the new mortgage servicing rules. The Bureau maintains a Regulatory Implementation website, which consolidates all of the new mortgage rules and related implementation materials and resources, at: http://www.consumerfinance.gov/regulatory-implementation.
More information about the CFPB’s mortgage rules is available at: http://files.consumerfinance.gov/f/201312_cfpb_mortgagerules.pdf.
To view the online press release, please click here.
About Safeguard
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.
