Describing his message as a “tough one,” CFPB Deputy Director Steven Antonakes told attendees yesterday at the Mortgage Bankers Association’s National Mortgage Servicing Conference that “continued sloppiness” by servicers “is difficult to comprehend and not acceptable.” While acknowledging the CFPB’s past statements that it would not immediately expect perfect compliance with the new mortgage servicing rules and instead would be looking at whether companies were making a good faith effort to comply, Mr. Antonakes’ remarks indicate that the CFPB will be taking a very narrow view of what constitutes a “good faith effort.”
Telling mortgage servicers that a “good faith effort does not mean servicers have the freedom to harm consumers,” Mr. Antonakes stated that he wanted to “very clearly lay out [the CFPB's] expectations.” He indicated that “in these very early days, technical issues should simply be identified and corrected” and that the CFPB expects servicers to “conduct outreach to ensure that all customers in default know their options” and “assess loss mitigation applications with care.” He stated that the CFPB will be paying “exceptionally close attention” to servicing transfers, looking to see if all information and documents are transferred as required. He further stated that failures to honor existing permanent or trial modifications “will not be tolerated” and that force-placed insurance should only be used as “a last resort” and not “as a profit center.”
As we continue to work with clients on implementing the new mortgage servicing rules and conducting assessments/gap analyses of their compliance management systems, we are proactively navigating the issues highlighted by Mr. Antonakes. It seems clear from the tenor of his remarks that any delay by servicers in achieving full compliance with the new mortgage servicing rules will carry significant risks. Now that the CFPB has delivered its warning, we suggest that our industry friends make full compliance an immediate priority.