TAMPA, Fla.-One credit union believes the new mortgage servicing rules from the CFPB are going to make life "quite difficult" for many CUs, depending on the kind of platform they have in place.
Kim Yarnelli, VP of member home loans with GTE Financial said for most credit unions the challenge will be making sure they are complying with all the changes that are occurring, and ensuring statements are up to date. He noted, happily, that GTE Financial converted in Q1 2011 from doing its mortgage servicing in house to a co-branded solution with Cenlar.
"With hindsight I am glad we did that," he said. "There are two top companies-Cenlar and Dovenmuehle. I feel comfortable they will be able to comply with the new requirements. The concern I have is if credit unions are using a true mortgage servicing platform they will be OK, as long as the platform was built specifically for mortgage servicing rather than a core processing system."
Yarnelli said GTE Financial created its own program for restructuring mortgages back in 2008, and restructured approximately $35 million in mortgages at that time, putting it "ahead of the curve" on the new loss mitigation requirements.
Rules To Wade Through
According to Yarnelli, CUs collectively will have to wade through all the many ramifications of the new rules. For example, he noted if an institution is adding forced-place insurance and a borrower is contesting, there used to be a 30-day period to resolve the problem, but the new rules allow for just 10 days.
"Often you don't even get notified in 10 days," he lamented.
Yarnelli also warned there will be ramifications on the collections side, with his immediate reaction being, "It will be difficult."
"Also, if there is a rush to convert to using a servicing company, there are only so many so there is a concern about getting converted before next January," he said. "It can take four months to get converted."
