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CFPB Supervision Report Highlights Mortgage Servicing Problems in 2013
Friday, January 31, 2014 6:55 AM

The Consumer Financial Protection Bureau (CFPB) yesterday issued a report highlighting problems like unfair and deceptive practices in the mortgage servicing market uncovered through the agency’s supervision program in 2013. The report also notes that, between July and October 2013, consumers received $2.6 million as result of overall non-public supervisory activities at the banks and nonbanks the CFPB oversees.

To address the shoddy mortgage servicing problems, the CFPB put in place new, common-sense rules designed to eliminate surprises and runarounds for homeowners. The rules, which went into effect on Jan. 10, 2014, require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request. The rules also include new, strong protections for struggling homeowners, including those facing foreclosure.

The CFPB has made it a priority to address mortgage servicing problems through its supervision program. Today’s report includes supervision work completed between July and October 2013. It focuses on the problems uncovered in mortgage servicing, at a time when the CFPB’s new mortgage servicing rules were not yet in effect. The agency’s previous supervision report similarly highlighted mortgage servicing problems. Both reports make clear that mortgage servicing misconduct continued to plague consumers throughout 2013.

The supervisory report describes several instances where servicers violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank Act) ban on unfair, abusive or deceptive acts and practices such as:

  • Unfair practices with servicing transfers
  • Waiving consumer rights
  • Poor payment processing
  • Failing to provide correct information to consumer reporting agencies

With yesterday’s report, the CFPB is also announcing that it is changing the format of supervisory reports in order to simplify them. The Bureau anticipates that these changes will reduce the amount of time between an examination and when the supervised institution receives the report.

This edition of Supervisory Highlights is available on the CFPB website.