The Consumer Financial Protection Bureau’s fuse has run out for mortgage servicers that are behind in implementing the agencies rules, according to CFPB Deputy Director Steve Antonakes, who spoke to the Mortgage Bankers Association in Orlando, Fla., on Feb. 19.
Servicers have had more than a year to prepare for a reform rule that took effect last month, Antonakes said. “It has felt like Groundhog Day with mortgage servicing for far too long,” he said, referring the movie Groundhog Day in which Bill Murray lives the same day over and over again. “Groundhog Day is over,” he said.
The CFPB has indicated it will be tolerant when mortgage servicers are behind schedule implementing its rules so long as they were making a “good-faith effort” to comply. Such allowances only extend so far, Antonakes said.”A good-faith effort…does not mean servicers have the freedom to harm consumers,” he said.
Antonakes laid out the bureau’s definition for “harm”:
- Banks must conduct outreach to ensure that all consumers in default know their options. The bank must assess loss mitigation applications with care so as to help consumers avoid foreclosure, he said.
- Banks must pay “exceptionally” close attention to servicing transfers. This process should be seamless for consumers, he said. “There will be no more shell games where the first servicer says the transfer ended all of its responsibility to consumers and the second servicer says it got a data dump missing critical documents,” he said.
- Banks should only turn to forced-placed insurance as a last resort rather than using it as a profit center, he said.
The CFPB already has ordered the return of more than $1 billion to consumers and mandated another $2 billion in foreclosure relief from companies that have not complied with its servicing rules. Antonakes said the bureau will be continue to be vigilant. “Business as usual has ended in mortgage servicing,” he said.