Senate steps toward new mortgage servicing standard
The Senate Banking Committee will hold a hearing Tuesday to develop a new national mortgage servicing standard. In January, federal regulators announced a new initiative to develop a set of servicing standards following weaknesses in the process that arose last year. The industry immediately began pushing for a unified approach, and regulators are at work with the 50 state AGs to align new requirements, especially for servicing nonperforming loans. Already, Congress is hearing from those who would like to be exempted from guidelines they see as too burdensome, especially for smaller institutions. B. Dan Berger, the executive vice president of the National Association of Credit Unions, sent a letter to Senate committee leaders Monday asking for an exemption. "In short, credit unions have not participated in the practices that have led to discussions about the worthiness of national mortgage servicing standards and should not be unjustly punished for the shortcomings of institutions that have," Berger said. "While it is important that the bad actors who failed thousands of their borrowers are held accountable, we would oppose extending any new compliance burden stemming from national mortgage servicing standards onto good actors such as credit unions." A review of more roughly 2,800 foreclosure files at the 14 largest mortgage servicers last year led regulators to conclude that although the issues were indeed widespread, the largest institutions showed the most signs of activities such as robo-signing, dual-track foreclosures and unnecessarily delayed modifications. Sen. Olympia Snow (R-Maine) and Sen. Jeff Merkley (D-Ore.) introduced legislation in May that would establish federal standards for mortgage servicers, but it was attached as an amendment to another bill and has yet to make it out of committee. Testifying before the committee Tuesday will be representatives from the Hope Now alliance of industry servicers, investors and counselors and a member of the Independent Community Bankers of America. No one from the major mortgage servicers will be taking questions at the hearing, however. Write to Jon Prior. Follow him on Twitter @JonAPrior.