A bulletin from the Consumer Financial Protection Bureau (CFPB) is warning mortgage servicers that they could face repercussions if consumers are harmed when servicing rights change hands. CFPB examiners will be watching for cases where borrowers get the "runaround" after mortgage servicing rights are transferred from one company to another, particularly for borrowers awaiting loss-mitigation steps.
The CFPB said servicers handling bigger transfers should be prepared to explain their plans to examiners for complying with the agency's servicing rules that took effect in January. These are meant to ensure that companies that are transferring servicing rights maintain accurate records on borrowers and do not cause interruptions for consumers awaiting modifications.
"At every step of the process to transfer the servicing of mortgage loans, the two companies involved must put in appropriate efforts to ensure no harm to consumers. This means ahead of the transfer, during the transfer, and after the transfer," declared CFPB director Richard Cordray. "We will not tolerate consumers getting the runaround when mortgage servicers transfer loans."
The new bulletin contains examples on how servicers should treat mortgages before and after a transfer. For example, examiners may want servicers to provide specific "tailored" instructions for individual loans before they are transferred and to conduct meetings with parties involved in a transfer. The bulletin also lists eight items that examiners will be seeking in the compliance plans, including details of how the servicing platforms store information and how the servicer will identify and correct errors.