The Consumer Financial Protection Bureau (CFPB) issued a bulletin this week advising mortgage companies about their legal obligations that protect consumers during loan transfers between mortgage servicers. When handing over the processing of loans, mortgage servicers should not lose paperwork, lose track of a homeowner’s loss mitigation plans, or hinder a consumer’s chances of saving their home from unnecessary foreclosure. The CFPB has a heightened concern about these practices given the large number and size of recent servicing transfers.
Mortgage servicers, among other things, collect and process loan payments on behalf of the owner of the mortgage loan. Mortgage servicing transfers are common and occur when a mortgage owner sells the right to service its loans or when the owner outsources the servicing duties. These transfers can be logistically challenging. A transaction could involve the moving of hundreds of thousands of loan documents.
Given that millions of borrowers have been impacted by servicing transfers, and given the prevalence of homeowners struggling to remain current on their mortgages, the CFPB will make servicing transfer-related problems a focus of its supervisory activities. If servicers are not fulfilling their obligations under the law, the CFPB will take appropriate actions to address these violations and seek all appropriate corrective measures, including remediation of harm to consumers.