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]