ORLANDO-Regulators have bombarded mortgage servicers with a flurry of new regulations and government programs in the past year, heaping on tasks and costly reviews. Now they're asking to hear the mortgage companies' complaints.
Mortgage servicers who gathered in Orlando to fret over the regulations and other problems facing their businesses were met with a surprise: nearly every regulator who spoke at the conference actively solicited their feedback, according to American Banker, an affiliate of Credit Union Journal
"We really want to hear from the servicing community on things they're concerned about or worried about," said Christopher C. Haspel, a senior advisor for securitization and servicing at the Consumer Financial Protection Bureau. He was one of several government officials to speak at a conference hosted by the Mortgage Bankers Association.
Julia Gordon, the manager of single-family policy at the Federal Housing Finance Agency, was even more explicit.
"I can't tell you how many times we've made a change from what we've heard in the field," said Gordon, a former senior policy counsel at the Center for Responsible Lending. "I've only been here 10 months, but I can assure you, we are trying to talk to all stakeholders."
Servicers Have Hands Full
Servicers will have their hands full in the months ahead trying to implement more government policies, some of which are tweaks to existing government programs that have run into problems in the past.
Though regulators said at the conference that they want to reduce "uncertainty" for servicers, they acknowledged that some of their policies will lead to more costs and regulatory risks. "We do understand that one of things mentioned about tighter credit availability is putback risk," said Mario Ugoletti, a special advisor to Ed DeMarco, the FHFA's acting director.
That putback risk is more prominent than ever, and has caused problems for some of the biggest mortgage servicers. Bank of America Corp. stopped selling some residential mortgages to Fannie Mae, citing an ongoing dispute over billions of dollars in mortgage repurchase claims, American Banker reported.
Servicers are also dealing with the cloud of suspicion they have been under ever since the industry's widespread robo-signing practices came to light.
Now regulators are demanding far more documentation of servicers' loss-mitigation and foreclosure processes, including audits and reviews of loan files. Federal regulators also are working on national servicing standards that are expected to contain more stringent reporting requirements.
"The servicers are increasingly required to report on every detail," said Diane Pendley, a managing director at Fitch Ratings. "Transparency is definitely the theme."
Nigel D. Brazier, a managing director at Newbold Advisors, said servicers need to identify each regulatory change, create processes to implement the changes that hold employees accountable and track their progress. "It all comes down to making sure every step of the process is tracked and documented," Brazier said. "Servicing should be like a utility with a consistent set of practices."
Fannie Mae, Freddie Mac and the Federal Housing Administration have all made changes to get servicers to resolve the massive backlog of seriously delinquent loans and those in the process of foreclosure.
