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Servicing / The Ticker

Are the states going to come after servicers again?

Industry already prepping for CFPB

February 19, 2014
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The weather didn’t stop them – or maybe it drove them—but more than 1,200 attendees made it to this year’s Mortgage Bankers Association's National Mortgage Servicing Conference in Orlando. That’s roughly the same as last year, according to Dawn Williams, who organizes the conference for the MBA.

Guess it shouldn’t be surprising, really, since last year our industry was waiting to see exactly what “new rules” we’d have to follow. This is the first servicing conference since new Consumer Financial Protection Bureau servicing rules took effect. So now we know them, but we’re working through what compliance means and we want to hear from the experts — both regulators and compliance and law firms — how the rules will be enforced.

As you’d expect, sessions like the scheduled Q&A with Joe Smith, who heads the Office of Mortgage Settlement Oversight, and any session or panel with a speaker whose business card includes the letters C…F…P…B will be well attended.

Judging by the number of law firms attending the conference and participating on panels, servicers are very interested in “prepping” for CFPB exams and audits. The questions they’re trying to get answers for are:

1. Are we doing the right things and crossing all the “T’s” and dotting the “I’s”?

2. How can we prove it? And the answer will have operational and economic consequences. They will drive new investments in technology, require additional staffing and may prompt some servicers to rethink the way they do all or part their of their business. For example, does it make sense to outsource certain parts of their portfolio or various high-touch functions?

One of the panels on Wednesday will look at the “new normal” for servicing. It will examine the fundamental business question: As we enter a period of more work…more risk… but static fees are these the new economics of servicing?

It will also touch on the delicate balancing act that many servicers are facing. After years of ramping up and throwing bodies at problems, how do we right-size organizations to handle more high-touch regs, while loss mitigation and foreclosures continue, but wind down? And can we make this transition, while staying compliant and at the same time being profitable?

Some of the other themes that I expect will be covered in the meeting rooms and (later at the hospitality hours) include the ongoing shift in servicing ownership. As the big banks rethink the value of servicing rights, hundreds of billions of dollars worth of business is changing hands and reshaping our industry.

State activism. Just when we thought the state AGs were done, and the CFPB was done…are the states going to come after servicers again?

These are some of the unsettled questions facing our industry. One thing's for sure: they won’t all be answered this week.

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