Loan Servicing – Consumer Financial Services Watch

The CFPB Gives Student Loan Servicers Bad Grades in New Report (Card)

Oct 06 2015

By: Steve Kaplan, Elyse Schoenfeld*, and Tori Shinohara
*Ms. Schoenfeld is not admitted in D.C. She is supervised by Melanie Brody, a member of the D.C. Bar.

On September 29, 2015, the CFPB issued a 151-page report that details perceived problems with student loan servicing practices and provides insight into the CFPB’s agenda for changes to the student loan industry. The report signifies increased efforts by the CFPB to address issues in student loan servicing and suggests that servicers will be subject to increased scrutiny in the future.

The report details comments the CFPB received in response to its May 2015 public inquiry seeking input on and recommendations for improving student loan servicing practices. The CFPB received more than 30,000 public comments from individual consumers, state attorneys general and banking regulators, trade associations, and other organizations. The report highlights comments on a host of problems borrowers are facing, including lost paperwork and payment processing errors, difficulties in correcting servicing errors, and issues accessing affordable repayment options or alternatives to avoid default. Commenters also responded to queries regarding the similarity of the problems facing the student loan servicing industry to issues in the mortgage market after the financial crisis, and suggested that the reforms made to mortgage practices could inform future changes to student loan servicing.

Mortgage Servicers: Don’t Forget ECOA’s Valuation Rule

Oct 21 2013

By: Nanci L. Weissgold, Kerri M. Smith

Mortgage loan servicers are toiling away at executing all the new servicing requirements in the CFPB’s Regulation Z and Regulation X amendments by the January 10, 2014 deadline. Given this overwhelming task, it is understandable that some servicers may not be as familiar with the CFPB’s ECOA Valuation Rule amending Regulation B. The Rule, which imposes an obligation to furnish a copy of valuations to borrowers of first-lien loans and to provide notice to borrowers of this right, may apply to a servicer’s loss mitigation efforts.

Conflicted Out: When Must a Servicer Follow FHA Guidelines over the Global Foreclosure Settlement Servicing Standards?

Apr 30 2012

By: Krista Cooley, Rebecca Lobenherz

The National Servicing Standards, outlined in the March 2012 Global Foreclosure Settlement, are difficult to reconcile with the already stringent servicing requirements in place for the Federal Housing Administration’s (“FHA”) single family loan insurance program. The National Servicing Standards are expressly subject to and must be interpreted in accordance with applicable federal, state and local laws, rules and regulations, and the terms and provisions of the requirements, binding directives and investor guidelines of the mortgage insurer, including FHA. In the event of a conflict between such requirements and the National Servicing Standards such that a servicer cannot comply with the National Servicing Standards without violating these requirements or being subject to adverse action, then the servicer must document such conflicts and notify the monitoring committee that the servicer intends to comply with the FHA requirements to the extent necessary to eliminate the conflict. Read More

Tag:Loan Servicing