In his first op-ed since taking the helm of the new Consumer Financial Protection Bureau, director Richard Cordray targets mortgage servicers and servicing documents as the next big to-do on the CFPB’s list.
“When I was a state and local treasurer in Ohio, I saw the housing crisis unfold in slow motion,” Cordray writes. “Brokers steered consumers into high-priced mortgages to earn higher fees. First-time homebuyers signed up for balloon loans — not understanding the risks. And unscrupulous operators looking to make fast cash crowded in, stealing market share from honest, responsible lenders that still cared about a borrower’s ability to repay.”
Citing reports that nearly 4 million mortgages in the U.S. are more than 90 days delinquent and nearly a quarter had negative equity at the end of the second quarter of 2011, Cordray says the CFPB will be working on servicing documentation as one of its next initiatives.
“The problems in mortgage servicing have been well documented. Some servicers have failed to communicate with homeowners, even letting phone calls go unanswered,” he writes. “Others have repeatedly lost paperwork and experienced widespread problems with foreclosure processing. Fees have been assessed that in some instances are unjustified or exorbitant. Reports also suggest that many borrowers who qualify for loan modifications have not received them in time to avoid losing their homes to foreclosure.”
Under the Dodd-Frank Act, the CFPB is required to put new mortgage servicing rules in place, Cordray writes, including a rule that requires mortgage servicers to provide consumers with better information in their billing statements. This week, the CFPB will release a prototype of that that statement would look like in an effort to collect feedback and input as the documents take shape.
In the future, Cordray notes, the agency will issue new protections around force-placed insurance.
View Cordray’s op-ed, originally appearing in Politico.
Written by Elizabeth Ecker