CFPB

CFPB Cracks Down On Mortgage Servicers’ Bad Tech

CFPB regulation

The CFPB has taken steps to crack down on mortgage servicers that aren’t keeping their technology up to date and, as a result, may be harming consumers.

According to the CFPB, these companies that have failed to implement new technology are in direct violation of the bureau’s new servicing rules. According to a report, CFPB examiners found violations related to technology and process breakdowns.

“Mortgage servicers can’t hide behind their bad computer systems or outdated technology. There are no excuses for not following federal rules,” said CFPB Director Richard Cordray. “Mortgage servicers and their service providers must step up and make the investments necessary to do their jobs properly and legally.”

The CFPB noted that mortgage servicers are responsible for collecting payments from the mortgage borrower and forwarding those payments to the owner of the loan. As a result, they manage customer service, collections, loan modifications and foreclosures. Now, however, the CFPB has put in place commonsense rules designed to eliminate surprises and runarounds for homeowners.

“Today’s report includes supervision work completed between Jan. 2014 and April 2016. While the servicing market has made some investments in compliance, those investments have not been sufficient across the marketplace to ensure compliance. CFPB examiners found that outdated and deficient technology poses risks to consumers across a number of mortgage servicers,” the CFPB wrote in a press release. “In addition, several mortgage servicers lack proper training, testing and auditing of their computer systems and software platforms and those of their service providers. As a result of this insufficient investment, mortgage servicing problems continue to plague consumers.”

Among the mortgage servicing problems observed by CFPB examiners:

  • Information about loan modifications is late, incorrect or deceptive due to technological breakdowns or malfunctions
  • Consumers get the runaround when loans transfer to a new servicer with incompatible computer systems

“CFPB examiners also observed that some servicers have made significant improvements in the last several years, in part by enhancing and monitoring their service platforms, staff training, coding accuracy, auditing and allowing for greater flexibility in operations. For example, one or more servicers had tools in place to search, review and track complaint records for potential regulatory violations. One or more servicers also created a complaint governance committee to oversee all customer complaints to ensure they receive appropriate treatment,” the bureau wrote in its release.

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