Outdated CFPB Servicing Technology puts Consumers at Risk
Luke Osborne November 14, 2016
“The mortgage-servicing industry is still struggling to adopt technology that will help them comply with a 2014 Consumer Financial Protection Bureau regulation that placed new rules on the sector”, CFPB Director Richard Cordray said Tuesday.
“While we applaud the investments made in compliance by certain servicers, others have not yet made satisfactory progress,” Cordray told this year’s annual conference of the Mortgage Bankers Association in Boston, according to prepared remarks. “Outdated and deficient servicing technology continues to put many consumers at risk. This problem is made worse by a lack of training to use their technology effectively.”
The 2014 CFPB rule required mortgage servicers to quickly correct errors reported by consumers and gave extra protection to borrowers in distress or facing foreclosure.
Cordray said the CFPB will try to address the problems he listed by demanding the firms having trouble with compliance work with the agency on “specific and credible plans” listing changes to information technology systems that will help firms with implementation. He also said the bureau will work more closely with the industry when crafting updates to the mortgage-servicing rule that are slated to go into effect in 2017.
Separately, Cordray addressed this month’s federal appeals court ruling that changed the mandate of the bureau’s director position. His comments on the constitutional issues raised in the ruling did not go much further beyond previous agency statements on the ruling.
“The case is not final at this point; the Bureau has made clear that it respectfully disagrees with the panel’s decision and is considering its options for seeking further review,” Cordray said about the case, PHH v. CFPB.
He said the CFPB will also “continue to consider” the appropriate enforcement of the Real Estate Settlement Procedures Act. In addition to its constitutional ruling about the CFPB’s structure, the appeals court faulted the agency on statutory grounds for fining the mortgage servicer PHH for using captive reinsurance.