Benjamin Lawsky, superintendent of New York's Department of Financial Services, is pressing for a clamp-down on the dramatic growth of non-bank mortgage servicers until such companies can get a handle on the business and no longer put homeowners at risk.
Some of the servicers may not be able to manage the loans they already have on their books, according to Lawsky. He said, in an address before the New York Bankers Association, "It is appropriate for regulators - where warranted - to halt the explosive growth in the non-bank mortgage servicing industry before more homeowners get hurt." Four of the top 10 firms servicing mortgages in the United States are non-banks, noted Lawsky, whereas all were banks just three years ago.
He concluded, "We are seeing far too many struggling homeowners getting caught in a vortex of lost paperwork, unexplained fees and avoidable foreclosures."