WASHINGTON–The CFPB has released a special edition supervision report focused specifically on mortgage servicers, saying it has found that some mortgage servicers continue to use failed technology that has already harmed consumers, putting the company in violation of the CFPB’s new servicing rules.
In its examinations covering numerous mortgage servicers since the new CFPB rules took effect in January 2014, the CFPB said its examiners have found violations because of deficient technology and process breakdowns. Specifically, examiners have observed problems with loss mitigation and servicing transfers. Saying it is seeking to spur the industry in its general compliance with CFPB rules, it is also releasing an updated mortgage servicing exam manual.
“Mortgage servicers can’t hide behind their bad computer systems or outdated technology. There are no excuses for not following federal rules,” said CFPB Director Richard Cordray. “Mortgage servicers and their service providers must step up and make the investments necessary to do their jobs properly and legally.”
To address these widespread mortgage servicing problems, the CFPB said it put “in place new, common-sense rules designed to eliminate surprises and runarounds for homeowners. The rules require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request. The rules also include protections for struggling homeowners, including those facing foreclosure. Compliance with many of these requirements necessitates strong policies and procedures related to systems and technology.”
The CFPB said its supervision program has made it a priority to address mortgage servicing problems. The just-issued report includes supervision work completed between January 2014 and April 2016.
“While the servicing market has made some investments in compliance, those investments have not been sufficient across the marketplace to ensure compliance,” the CFPB said. “CFPB examiners found that outdated and deficient technology poses risks to consumers across a number of mortgage servicers. In addition, several mortgage servicers lack proper training, testing, and auditing of their computer systems and software platforms and those of their service providers. As a result of this insufficient investment, mortgage servicing problems continue to plague consumers.”
Among the mortgage servicing problems observed by CFPB examiners:
- Information about loan modifications is late, incorrect, or deceptive due to technological breakdowns or malfunctions.
- Consumers get the runaround when loans transfer to a new servicer with incompatible computer systems.
- Mortgage servicing exam procedures.
- Complaint handling and requests by troubled borrowers.
- Discrimination issues.
This Supervisory Highlights Mortgage Servicing Special Edition is available here.
The updated mortgage servicing exam procedures is available here.