Mortgage servicers expecting temperate enforcement of the new mortgage servicing rules received a wake-up call from Consumer Financial Protection Bureau (CFPB) Deputy Director Steven Antonakes during his February 19, 2014 remarks to the Mortgage Bankers Association.
Antonakes, calling himself a “career bank regulator,” acknowledged the “critical role” that mortgage servicers play in the mortgage market, describing their impact on borrowers and communities as, at times, “profound.” According to Antonakes, United States mortgage servicers manage a debt portfolio of nearly $10 trillion. To protect consumers engaged with the mortgage servicing market, Antonakes explained, the CFPB has implemented a “back to basics approach” to rein in the “continued sloppiness” attributable to mortgage servicers. He promised that the Bureau would be “vigilant about overseeing and enforcing” these rules.
The CFPB intended the new rules, which took effect on January 10, 2014, to reduce uncertainty and unfairness in the industry’s treatment of consumers. As described by Antonakes, these “new rules of the road” include: keeping consumers informed about their loans; investigating and fixing errors; monthly statements containing carefully prescribed information; performing basic customer-service functions;” informing consumers about all available options; restricting “dual tracking;” and disallowing foreclosures on properties where the parties have reached, and not breached, a loss mitigation agreement.
According to Antonakes, mortgage servicers likewise should expect little uncertainty and unfairness in the Bureau’s enforcement of both new and existing rules. Although Antonakes acknowledged that the Bureau would look for “good faith effort” during the early months under the new rules, he qualified the scope of “good faith effort,” stating: “A good faith effort, however, does not mean servicers have the freedom to harm consumers. It has felt like ‘Groundhog Day’ with mortgage servicing for far too long.”
Antonakes listed some of the Bureau’s expectations as follows:
- Mortgage servicers should “conduct outreach” to consumers to ensure they know all of their options in default;
- Mortgage servicers should “assess loss mitigation applications with care”;
- Mortgage servicers should effectuate “seamless” servicing transfers;
- Servicing transferees should honor existing loan modifications; and
- Mortgage servicers should use force-placed insurance only as a last resort.
Antonakes recognized that his message was “a tough one,” unlikely to garner much patronage among the audience of mortgage bankers. He closed: “We have raised the bar in favor of American consumers and we are ready, willing and able to vigorously enforce that bar.”