CFPB Releases Report on 2013 Servicing Rule

The Consumer Financial Protection Bureau today released a major report assessing its 2013 RESPA mortgage servicing rule. The five-year assessment, which was mandated by the Dodd-Frank Act, found that certain elements of the rule were quite costly to implement, while others were less so. ABA staff are closely reviewing the 300-page report.

The bureau noted that, starting after 2010, borrowers who became delinquent became increasingly likely to recover from delinquency. Attempting to untangle the results of the rule with the broader economic trend, the CFPB estimated that without the rule, at least 26,000 more borrowers — less than 0.05 percent of the 53 million outstanding mortgage loans that year — who became delinquent in 2014 would have been foreclosed on, and that at least 127,000 fewer delinquent borrowers would have recovered.

Meanwhile, the CFPB’s research found that the cost of servicing a mortgage rose substantially in the years before and around the time the rule and similar requirements took effect. Servicers also reported one-time implementation costs ranging from $53 million to $743 million. The total ongoing cost of complying with the rule was estimated to range from $156 million to over $572 million annually. According to the report, the costliest provisions of the rule to comply with related to loss mitigation application processes and foreclosures.