Mortgage servicers have failed to make significant investments in technology and compliance systems, resulting in substantial harm to consumers, according to a report issued Wednesday by the Consumer Financial Protection Bureau.
The report, which provided a detailed look at supervisory exams of mortgage servicers between January 2014 and April 2016, found that outdated and deficient technology can lead to greater risks for borrowers.
The CFPB found that some servicers failed to honor loan modifications after a loan gets transferred. Borrowers also faced substantial delays in receiving permanent modifications because of incompatible systems, the report found.
"Mortgage servicers can't hide behind their bad computer systems or outdated technology," CFPB Director Richard Cordray said in a press release. "Mortgage servicers and their service providers must step up and make the investments necessary to do their jobs properly and legally."
The CFPB also said it will be conducting targeted reviews this year of mortgage servicers' compliance with fair lending laws. The reviews will include looking at servicers that are creditors, such as those that participate in a credit decision about whether to approve a mortgage loan modification.
The agency said it is making sure creditors do not discriminate in any aspect of a credit transaction because of race, color, religion, national origin, sex, marital status, age, or income from a public assistance program.
Mortgage servicing has been a top concern for the CFPB since it first began examining financial institutions, but examiners continue to unearth problems.
CFPB examiners found problems with loan modification acknowledgement notices, including notices sent too late, with incorrect information or deceptive statements.
The report cited at least one servicer that failed to send any loss mitigation acknowledgement notices to borrowers due to a "processing platform malfunction over a significant period of time."
"The magnitude and persistence of compliance challenges since 2014, particularly in the areas of loss mitigation and servicing transfers, show that while the servicing market has made investments in compliance, those investments have not been sufficient across the marketplace," the report stated.
The agency also updated its mortgage servicing exam manual, which includes a section on how servicers handle complaints and requests by troubled borrowers.