Robo-signing Scandal To Spawn New Rules For Mortgage Servicing
WASHINGTON – Credit unions are worried that Congress is readying new rules governing the mortgage servicing segment, just as new standards for the originations and secondary market sales segments are beginning to take shape.
The new rule making comes as authorities are pressing new cases against the largest mortgage lenders for allegedly falsifying signatures in hundreds of mortgage foreclosures, a practice that has become known as robo-signing. The scandal is expected to broaden as the true ownership of millions of homes is becoming murky because of their lack of, or incorrect recordation in, the industry’s electronic mortgage registry, known as MERS.
NAFCU urged leaders of the Senate Banking Committee to spare credit unions from additional regulation as they study the impact lax servicing practices had over the current robo-signing scandal surrounding the biggest banks, including JP Morgan Chase, Wells Fargo, HSBC and Bank of America.
NAFCU Chief Lobbyist Dan Berger urged the top Democrat and Republican on the banking panel to spare some of the regulations that may result from the scandal. “While NAFCU member credit unions understand that national mortgage servicing standards are one policy option being explored in the wake of revelations that the nation’s largest banks may have a host of irregularities in their foreclosure practices, NAFCU urges caution in extending costly and burdensome new requirements to not-for-profit credit unions,” Berger told the senators.
The NAFCU lobbyist said credit unions have not participated in the practices that have led to discussions about the worthiness of national mortgage servicing standards and should not be punished for the shortcomings of institutions that have. “Extending new compliance requirements on credit unions because of the poor practices of large, for-profit banks would be very burdensome for credit unions,” he added. “While it is important that the bad actors who failed thousands of their borrowers are held accountable, we would oppose extending any new compliance burden stemming from national mortgage servicing standards onto good actors such as credit unions.”