CFPB Servicing Exams to Focus More on Borrower Requests, Discrimination

The Consumer Financial Protection Bureau today issued updated exam procedures for its mortgage servicing rules, based on the agency’s experience in the two and a half years since the rules took effect in January 2014. The bureau noted that servicers should expect a “greater emphasis” from bureau examiners on how they handle complaints from borrowers and requests from troubled borrowers, as well as discrimination issues.

Examiners will review “whether the servicer has an adequate process for expedited evaluation of complaints or information requests from borrowers facing foreclosure,” the CFPB said, adding that an appropriate complaint escalation process is “essential” to a compliance management system. Meanwhile, “the CFPB is conducting targeted reviews of mortgage servicers’ compliance with fair lending laws,” the bureau added. “This includes looking at those servicers that are creditors, such as those that participate in a credit decision about whether to approve a mortgage loan modification.”

The bureau also released a special edition of its Supervisory Insights publication focused on servicing. It noted multiple instances where borrowers received late or incorrect information about loan modifications due to technological breakdowns and where borrowers faced runarounds following servicing transfers between companies with incompatible computer systems.