CU-Backed Consumer Lobby Urges Federal Standards For Mortgage Servicers
WASHINGTON – Consumer advocates and bankers both called on Congress this morning to set national guidelines on mortgage servicing to help resolve millions of pending home foreclosures.
“The creation of basic ground rules in servicing that apply to all, and that are enforced as to all, will allow the servicing market to function more effectively, to the benefit of all,” said Michael Calhoun, head of the credit union-backed Center for Responsible Lending, during a congressional hearing this morning.
The bid to regulate mortgage servicers comes as Congress has moved to regulate all areas of the mortgage market, with new rules for licensing originators and for the secondary market already in the works.
The consumer advocate was joined in endorsing national servicing standards by the Mortgage Bankers Association, saying while servicers are regulated under various mortgage laws there is little clarity as the duties and legal authority of servicers. “Almost every aspect of the servicer’s business is regulated in some fashion, but the rules are not always clear, placing servicers in a position of having to guess as to the requirements,” said David Stevens, president of the mortgage bankers group.
Appearing before the two lobbyists was Raj Date, the associate director of research at the new Consumer Financial Protection Bureau, who said setting national standards for mortgage servicing will be one of the fledgling consumer agency’s top priorities.
Calhoun, whose group is funded by Self-Help CU, said servicing standards should address two areas. First, pre-foreclosure loss mitigation, and then guidelines for servicer duties and restrictions. “Deep-seeded problems in the servicing industry are harming borrowers, investors, and the economy as a whole,” said Calhoun. “Putting in place fair, basic ground rules for mortgage servicing is critical to addressing the housing crisis that continues to plague our economy.”
The lobbyists were appearing this morning at a hearing by the House Financial Services Committee which is reviewing allegations of abuse by loan servicers during the current foreclosure crisis.