- By: Staff Editor
- Date: October 21, 2011
The Consumer Financial Protection Bureau (CFPB) was one of the regulatory requirements outlined in the Dodd Frank financial reform act of 2010 aimed at increasing scrutiny of financial institutions and their practices. The Bureau, which was created with the stated goal of protecting banking and other financial services customers and defending their rights, intends to increase its oversight of the mortgage servicing industry as well.
In an emailed statement to news agencies, Raj Date, the special adviser to the Treasury Department for the consumer bureau, said that “Mortgage servicing has a huge impact on consumers and is a priority for the CFPB.”
Date also said in the statement that the bureau would “…take a close and measured look at whether servicers are following the law.”
Areas of examination
According to Bloomberg, the CFPB would examine loan modification procedures to ensure that servicers were providing accurate, prominent and clear information about alternatives to foreclosure.
In the statement, Date said that the CFPB would also scrutinize the foreclosure process to make sure that “the borrower is actually in default and all of the necessary records have been carefully reviewed.” Fees charged to defaulting borrowers would also come under close examination to ensure that they are not “duplicative or otherwise illegal.”
The CFPB, which started functioning on July 21, also released a broader guide that is meant to instruct Bureau employees and financial institutions about how it will conduct its bank supervision and scrutiny of financial products that they sell.
According to Reuters, the agency will “initially focus its supervision efforts on the 105 banks, thrifts and credit unions that have more than $10 billion in assets.”
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Why increase scrutiny of mortgage servicing industry
Reuters quoted Date as saying that consumers faced abuses from the mortgage servicing industry because “borrowers can not choose who collects their payments and because servicers do not get paid more to handle foreclosures, which are more time consuming and complicated.”
"Given those structural problems, it's no surprise that the mortgage servicing market has been plagued by pervasive and profound consumer protection issues," Date told the agency.
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