- CFPB Releases Supervision and Examination Procedures Specifically for Mortgage Servicers
- October 24, 2011 | Authors: David N. Anthony; Jarrod F. Loadholt; John C. Lynch
- Law Firms: Troutman Sanders LLP - Richmond Office ; Troutman Sanders LLP - Atlanta Office ; Troutman Sanders LLP - Washington Office
- In addition to the October 13, 2011, release of its general Supervision and Examination Manual, the Consumer Financial Protection Bureau released separate supervision and examination procedures for mortgage servicers. No other consumer financial service provider was singled out, and taken in tandem with public comments from the CFPB’s Raj Date and other senior officials concerning “pervasive” servicer abuses and the need for mortgage servicing reform, mortgage servicers likely will be the focal point of the CFPB’s supervision and examination regime.
In an October 13, 2011, article in HousingWire, the CFPB suggested that its supervision and examination of mortgage servicers would focus on loans already in default to determine if servicer foreclosure governance processes comply with federal law. According to the article’s interview with Mr. Date, servicer business practices that will be targeted for compliance during the examination process will include servicer loan modification processes, policies for referring loans into foreclosure, and fees that servicers charge to distressed borrowers.
In anticipation of CFPB supervision and examination, mortgage servicers should: (1) review the manual’s general procedures for supervision and examination; (2) conduct spot audits of their foreclosure governance processes in light of the guidance set forth in the procedures (particularly Modules 7-9); and, (3) give serious consideration to submitting comments to CFPB [email protected] for improving the supervision and examination process.