Mortgage service professionals may deal with one loan at a time, but the impact of their actions are felt community-wide.
That is part of the message from Ann Thompson, a senior analyst for Office of Supervision Policy at the Consumer Financial Protection Bureau.
The analyst explained the new set of standards in effect for mortgage servicers should be viewed as a "back to basics" approach necessary for the responsible functioning of the industry. During the housing bust, entire communities suffered from widespread defaults. And while no one thing can be totally to blame, Thompson spoke of the way all aspects of homeownership are connected to a picture that's larger than any one participant.
Thompson made her remarks during the SourceMedia mortgage servicing conference now underway in Dallas. The aim of her speech seemed to revolve around the CFPB recognizing the power of the mortgage servicing industry to shape neighborhood landscapes, and to be certain the industry understands its role in the same way.
After all, this power, she indicated, may result in good or bad.
"[Mortgage servicer] effects on communities can be profound," Thompson said, adding later that despite this impact, "consumers don't choose their servicer."
The transfer of mortgages to a servicer happens without the consent of the borrower and homeowners can't change mortgage servicers if they are unhappy with the customer service.
Thompson said the CFPB believes better choices are made when consumers have the choice in the first place.
Furthermore, she explained that the transfer of mortgage servicer rights must uphold any and all mortgage obligations made to homeowners by the lender or previous servicer, especially when distressed.
Assessing higher fees or dropping a modification, for example, won't be tolerated by the CFPB, Thompson said.
"No foreclosure sale can go through unless all other options are exhausted," reminded Thompson.
Perhaps more notable, Thompson went to some length to thank the mortgage service industry for the work it does in maintaining homeownership. This represented a departure from remarks made at the Mortgage Bankers Association’s National Mortgage Servicing Conference & Expo 2014. There, Steven Antonakes, deputy director of the CFPB, levied much sterner words toward the industry.
Under the new rules, in effect from January 10, firms that provide services to mortgage servicers are also culpable for any irresponsible actions.
This includes foreclosure attorneys and property preservationists; Thompson's mentioned examples. The analyst cited the CFPB Supervisory Highlights webpage as a great resource to keep abreast of regualtory developments.
In case of any violations (injury to consumer), the CFPB has the authority to hold both the servicer and the service provider accountable and subject to relevant penalties, Thompson added.
"Restoring confidence in this market is critical to consumer and servicer alike," she said.