The Consumer Financial Protection Bureau, created under the 2010 Dodd-Frank reform law, will require some mortgage servicers to develop general plans for avoiding complications arising from the transfer of servicing rights.
"The CFPB bulletin, which was issued nearly a month after the bureau finalized a broad series of general requirements for mortgage servicers - warned of recent consumer complaints about service interruptions, the failure of new servicers to recognize terms of loan modifications and other complications arising from transfers of servicing rights between companies," writes American Banker's Joe Adler.
"Consumers should not be collateral damage in the mortgage servicing transfer process," CFPB Director Richard Cordray said in a press release. "This guidance directs all mortgage servicers, both banks and nonbanks, to follow the laws protecting borrowers from the risks of such transfers, and makes clear that we will be monitoring them for compliance."
"It appears transferee servicers sometimes fail to honor the terms of trial loan modifications provided by predecessor servicers because relevant documents are not transferred to the transferee servicer, or the transferee servicer does not take adequate steps to identify mortgages subject to trial loan modifications," the bulletin said. "The CFPB is making these and other servicing transfer-related issues a focus of supervisory activities in the mortgage servicing area."
For the full piece see "CFPB to Patrol Risks from Mortgage Servicing Handoffs" (may require subscription).