By Katalina M. Bianco, J.D.
Commenters are weighing in on the Consumer Financial Protection Bureau’s proposal to amend its 2013 mortgage servicing rules. The American Bankers Association and Americans for Financial Reform have submitted comment letters to the bureau and, somewhat predictably, their views on the proposal are polar opposites. The ABA argues that the proposal should be cut back, while the AFR, a coalition of national, state, and local groups advocating financial reform, contends that the proposal does not go far enough to protect consumers.
The CFPB’s proposal would amend Reg. X—Real Estate Settlement Procedures (12 CFR Part 1024) and Reg. Z—Truth in Lending (12 CFR Part 1026) to substantially broaden mortgage borrower protections for consumers who are in financial distress or in danger of losing their homes through foreclosure.
ABA comments. The ABA expressed concern that the proposal would add regulatory requirements to “an already extensive and complex regulatory framework.” The trade group pointed out that the CFPB’s servicing rules already exceed the requirements mandated by the Dodd-Frank Act. The “continued layering of detailed regulatory requirements” will continue to decrease the value of mortgage servicing for banks of all sizes, the ABA argued. “Consumers (particularly those in rural areas) will be hurt, not helped, if rulemakings result in further consolidation in the servicing industry.” The trade group said its members are reevaluating to determine how few loans they can service for servicing to remain a viable business proposition.
AFR letter. The AFR said that there are many areas not included in the proposal that should be covered, such as: requiring servicers to better meet the needs of borrowers with Limited English Proficiency; patching the gaps in the dual tracking rule by allowing applications submitted fewer than 37 days prior to sale to trigger a temporary pause in foreclosures; and requiring servicers to process appeals for all applications submitted within the dual tracking timelines. The coalition also noted that with the upcoming end to the HAMP program, the CFPB should require servicers to provide affordable loan modifications consistent with investor interests. The AFR told the bureau that the coalition believes it is within the CFPB’s authority to issue such a requirement.
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