On February 11, 2013, in response to the increased volume of mortgage servicing transfers and the potential impact of these transfers on consumers, the Consumer Financial Protection Bureau (CFPB) issued a bulletin to mortgage servicers, both banks and nonbanks, advising them of their legal obligations to protect consumers during loan transfers. The bulletin indicates that the CFPB is particularly concerned about lost paperwork during transfers, service interruptions when loans are transferred during the loss mitigation process, and wrongful foreclosures.
Specifically, the CFPB stated that its examiners will focus on:
How a servicer has prepared for the transfer of servicing rights and/or responsibilities: This will focus on procedures servicers have in place to ensure a smooth transfer of information that does not result in a disruption of services to consumers, as well the plans and procedures of both the old and new servicers to respond to consumer questions about the transfer.
How a new servicer handles transferred files: The CFPB will take a close look at the new servicer's plans and procedures to ensure that they are providing accurate information to consumers and are identifying any ongoing loss mitigation at the time of transfer, so the consumer does not have to restart this process.
The policies servicers have in place to prevent harm to borrowers with loss mitigations in process: If a consumer has reached an agreement with their loan servicer on a loan modification, these plans should be honored by the new loan servicer.
The CFPB warned that it will take "appropriate supervisory and enforcement actions" if it discovers violations.
The full bulletin is available for review at the CFPB website.
This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.
Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.