A Government Accountability Office report highlights deficiencies in mortgage foreclosure processes and recommends that banking regulators and the Bureau of Consumer Financial Protection (CFPB) develop plans for overseeing mortgage servicers. Further, GAO recommends that the CFPB include foreclosure practices in any servicing standards that are developed.
Headlining the report is the assertion that documentation problems have revealed a need for ongoing regulatory oversight. Mortgage services brought foreclosures to a halt in September, GAO writes, finding that documents required to be provided to courts in some states may have been improperly signed or notarized. This led to the GAO study, which examines the extent to which federal laws address mortgage servicers’ foreclosure procedures and federal agencies past oversight; federal agencies’ current oversight and future plans; and the potential impact on involved parties.
“Until the problems regarding foreclosure documentation came to light, federal regulatory oversight of mortgage servicers had been limited, as such activities were viewed as low risk to safety and soundness,” GAO writes.
This, in part, has led to the problems with foreclosure documentation and process, the report says. The recommendation, now, is for the CFPB, set to launch July 21, to take the reigns on overseeing the process as well as the servicing organizations, and to develop standard practices that can be used.
View the GAO report.
Written by Elizabeth Ecker