CFPB Working On Rules To Whip Mortgage-Servicing Industry Into Shape

The Consumer Financial Protection Bureau is sinking its teeth into its new watchdog role, as today they’re expected to announce a few rules they’re working on to try and clean up the mortgage-servicing industry. Here’s where we imagine banks quaking in their big ol’ boots.

The CFPB wants to whip the scandal-ridden industry into shape by increasing transparency and accountability, says the Washington Post. The new guidelines would require mortgage servicers to warn homeowners “before any interest rate adjustments, provide options for delinquent borrowers to avoid foreclosure, investigate errors within 30 days and improve staff accessibility to consumers” and more.

Before they formally propose the rules, the CFPB wants to get comments from businesses and the public. The rules would then likely be finalized by next year. Director Richard Cordray is slated to unveil the regulation plan in a speech today at Operation Hope, a Southeast Washington nonprofit group focused on financial literacy.

“For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress,” he said in a statement. “It’s time to put the ‘service’ back in mortgage servicing.”

The new rules come on the heels of a $25 billion agreement by five of the largest bank-run mortgage servicers to clean things up in their industry, after it was plagued with reports of bad practices and messed up paperwork.

CFPB considering rules for mortgage servicers [Washington Post]

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  1. Blueskylaw says:

    “CFPB Working On Rules To Whip Mortgage-Servicing Industry Into Shape”

    I like it when people use the word whip and corporations in the same sentence.

  2. Hoss says:

    They need to crack down on companies like Green Tree that take advantage of people that don’t know the terms of their mortgage. No, Green Tree, I will not pay you before the 1st of the month and it’s total BS that it takes you 4 days to process an ACH.

    • dadelus says:

      Couldn’t agree with your more BoA bought out mortgage shortly after we bought our house and just recently sold it to Green Tree. We have had nothing but problems with that company since they took it over.

      In the four months we’ve had our mortgage we’ve had to fight with them over a “missed payment” (the money had been paid to BoA before notice was sent that our mortgage had been sold), Incorrect information being reported to credit agencies (they reported that our mortgage term was 375 months instead of 360) and they send out notices of payment increase that don’t explain why the increase is occurring which means I then have to call and deal with their VERY rude customer support people.

      I would love to refi my mortgage (and am in the process of doing so) but all the mistakes they’ve made in reporting data to the credit agencies is derailing the attempt.

  3. Lyn Torden says:

    Maybe this will provide a level playing field for an honest Mortgage Servicer. Too bad it isn’t the consumer that gets to choose their servicer. If it were, then honest ones might actually enter the market.

    • Hoss says:

      Excellent point about the ability to choose!

      • TuxthePenguin says:

        Would you be willing to pay for the right to choose? Because that’s honestly what it would take.

        • Hoss says:

          It could work either way. There is risk all through the process

        • exconsumer says:

          No need. We have a government, so we can use our system of law to ensure that these mortgage servicers are not engaging in strictly legal behavior, and are meeting their contractual obligations.

    • NeverLetMeDown says:

      Yeah, there’s totally no issue with letting people choose who’s responsible for collecting money from them. That would definitely work well.

  4. TuxthePenguin says:

    “For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress,” he said in a statement. “It’s time to put the ‘service’ back in mortgage servicing.”

    I hate to be the voice of reason, but the borrow is not the “customer” for mortgage servicers – their customer is the mortgage holder. If I hire someone to collect a debt for me, I am the customer, not the borrower.