CFPB: Servicers still engaged in unfair or deceptive practices
Consumer bureau gets firms to pay $2.6M to settle issues with consumers
This is not 2009 or 2010 – the height of the mortgage servicing crisis – but servicing issues remain a source of concern, with the Consumer Financial Protection Bureau reporting that it caught firms violating national servicing standards outlined by the bureau last year.
Overall, the bureau says between July and October 2013, financial firms accused of violating servicing practices had to pay out $2.6 million to resolve existing issues.
Servicing issues, or complaints over loan mods, foreclosures and payment processing, continue to be a top concern in the mortgage side of the market.
"Problems in mortgage servicing have plagued consumers for years and helped contribute to the financial crisis,” said CFPB Director Richard Cordray. "Taking action against mortgage servicing practices that harm consumers is a key priority for the CFPB. Especially under the detailed protections of our new rules, we expect servicers to clean up their act and provide responsible customer service."
So where are servicers still falling short? The bureau noted that two servicers engaged in unfair practices during loan servicing transfers by failing to honor existing or permanent loan modifications after boarding the loans. As a result, the borrowers were charged the wrong loan amounts.
Two servicers also landed on the CFPB’s radar for requiring borrowers to waive existing claims against the firms in order to obtain loan mods or forbearances. Furthermore, the CFPB said loan payment processing remains an issue at some firms, as well as incorrect data reporting to the credit bureaus.
The CFPB shed some light on how the oversight and enforcement process was handled in these cases. The agency alerted the companies about the problems first hand and then specified remedial measures. The CFPB said when appropriate, it opened investigations for potential enforcement actions.
In December, the bureau filed one enforcement action against servicer Ocwen (OCN), ordering the firm to pay $2 billion in principal reductions to underwater borrowers and refund $125 million to borrowers impacted by foreclosures.
The CFPB in that case said it found issues at every stage of the mortgage servicing process.