page contents
USA Real Estate Blog

Mortgage servicers need to keep best practices in place: S&P

0 4


Most mortgage servicers should still follow best practices established after the financial crisis even as federal regulators take a less assertive approach to enforcement, a Standard & Poor’s report said.

Servicers need to remain vigilant as state regulators and attorneys general are poised to step up enforcement.

Some of the recent positive news for the “beleaguered industry” included: acting Consumer Financial Protection Bureau Director Mick Mulvaney’s statements at the Mortgage Bankers Association annual convention, the Senate Banking Committee’s approval of Kathy Kraninger for the permanent job, the dropping of Real Estate Settlement Procedures Act cases against PHH and Zillow, and Brett Kavanaugh’s elevation to the U.S. Supreme Court.

“While we believe the regulatory landscape has changed and that these actions offer some promising developments for servicers, this overture could still prelude some hurdles,” said the report, written by Steven Frie and Mark Shannon. “Additionally, since servicers have invested considerable capital — both financial and human — we expect them to continue to follow industry best practices despite the possibility of loosening regulations.”

But as the CFPB backs off from the level of enforcement under former director Richard Cordray, some state regulators are looking to fill the void. New Jersey hired Paul Rodriguez to be director of the Division of Consumer Affairs and turn it into a state-level CFPB. Pennsylvania Attorney General Josh Shapiro created a Bureau of Consumer Protection.

Other state attorneys general have also said they will step up their enforcement. Plus the Multistate Mortgage Committee remains active, pointing to a 2017 settlement with PHH on legacy servicing issues.

“We believe that the regulatory environment will remain uncertain as the CFPB establishes its regulatory routines and enforcement protocols with servicers,” the report said. “State governments and the MMC remain challenges for servicers as new state-level consumer protection units take form and as states continue to work together to investigate and bring about enforcement actions. Therefore, servicers will likely still be diligent in identifying possible regulatory issues at the federal, state, or municipal levels.”

Servicers also need to be concerned about reputational risk if some companies backslide into prior practices.

“If anything, a continuing trend of even minor violations of the law will have an unfavorable effect on a servicer’s reputation and could invite scrutiny by federal or state regulators, regardless of loosening regulations,” the report said.

There is $10.2 trillion of mortgage debt outstanding as of the second quarter, up from $9.4 trillion on March 31, 2016, according to the MBA.


Brad Finkelstein

Brad Finkelstein is the originations editor of National Mortgage News.

قالب وردپرس

You might also like

Leave A Reply

Your email address will not be published.

Pin It on Pinterest

Share This

Share this post with your friends!