WASHINGTON (1/31/14)--The Consumer Financial Protection Bureau (CFPB) released a report detailing problems in the mortgage servicing market over the previous year. The report also notes that between July and October 2013 companies returned $2.6 million to consumers as a result of overall CFPB supervisory activities.
Mortgage services are responsible for collecting payments from borrowers and delivering that payment to the loan originator. They also handle customer service, loan modifications, and foreclosures.
As a result of the financial crisis and housing market collapse, many mortgage service providers were unable to provide the necessary services, the CFPB said. However, the bureau noted, the mortgage services market has been plagued with problems for years, even before the financial crisis of 2008.
"Taking action against mortgage servicing practices that harm consumers is a key priority for the CFPB," said CFPB Director Richard Cordray as he made the report public. "Especially under the detailed protections of our new rules, we expect servicers to clean up their act and provide responsible customer service."
The CFPB's recent report uncovered many instances of unfair practices such as borrowers being charged the wrong amount, waiving the consumer rights of borrowers, poor payment processing, and failing to provide correct information to the consumer reporting agencies.
Where these unfair practices were discovered, the CFPB alerted the company of their concerns and specified necessary remedial measures and, when appropriate, opened investigations for potential enforcement actions.
To address the problems the CFPB adopted new rules, which went into effect on Jan. 10. These 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 new, stronger protections for struggling homeowners, including those facing foreclosure.
With today's report, the CFPB is also announcing that it is changing the format of supervisory reports in order to simplify them. The bureau anticipates that these changes will reduce the amount of time between an examination and when a supervised institution receives the report.
Use the resource link to read additional highlights of the CFPB findings.