Sen. Olympia Snow (R-Maine) and Sen. Jeff Merkley (D-Ore.) introduced legislation Thursday establishing federal standards for mortgage servicers.
S.967, or the Regulation of Mortgage Servicing Act, would require servicers to create a single-point of contact for borrowers and end the dual-tracking of pursuing foreclosure and loan modification simultaneously. The bill also requires third-party review of servicers' actions before foreclosure.
Both Snowe and Merkley said their offices have been overwhelmed with calls from borrowers confused and frustrated with the process.
Regulators began pursuit
of a national and uniform servicing standard in February after servicers came under investigation for faulty foreclosure practices. Mortgage Bankers Association
CEO David Stevens said Thursday a uniform standard is crucial
for the industry overloaded with varying requirements across the country and from several businesses.
"It is critical that we restore confidence in the relationship between homeowners and the loan servicing industry and remove confusing barriers to mortgage modifications," Snowe said.
The bill isn't alone. In April, Rep. Elijah Cummings (D-Md.) introduced a bill
requiring more disclosure from servicers while establishing mediation programs across the country. It's a companion bill to one introduced in the Senate.
Sen. Sherrod Brown (D-Ohio) introduced a bill
in April, as well, attempting to improve standards for staffing and casework at servicing companies and explicitly requiring servicers to work with homeowners to achieve a modification resolution before foreclosure.
Merkley said the latest bill he and Snowe introduced would be a significant crackdown.
"This legislation will put these bad practices to an end," Merkley said.
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