The Consumer Financial Protection Bureau has found that some mortgage servicers continue to use failed technology, which it said is harming consumers.
The CFPB released a special edition supervisory report on its examination of mortgage servicers between January 2014 and April 2016, since new servicing rules went into effect. Examiners have found violations because of deficient technology and process breakdowns, according to a CFPB news release.
“Mortgage servicers can’t hide behind their bad computer systems or outdated technology,” CFPB Director Richard Cordray said in the release. “There are no excuses for not following federal rules. Mortgage servicers and their service providers must step up and make the investments necessary to do their jobs properly and legally.”
Mortgage servicers collect payments from mortgage borrowers and forward those payments to the owners of the loans. They handle customer service, collections, loan modifications and foreclosures.
The CFPB rules require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly handle credit payments, and correct errors on request, according to the release. The rules also provide protections for struggling homeowners, including those facing foreclosure.
CFPB examiners found outdated and deficient technology by mortgage services poses risks to consumers. Several mortgage servicers lack proper training, testing, and auditing of their computer systems and software platforms and those of their service providers, according to the CFPB.
Common mortgage serving problems observed by CFPB examiners include information about loan modifications often being late, incorrect or deceptive due to technological breakdowns or malfunctions. Consumers also often face greater risks and inconvenience when loan documents are transferred to new servicers with incompatible computer systems, according to the release.
CFPB examiners alert institutions when they discover violations of laws or other significant problems or weaknesses, and outline necessary remedial measures. The CFPB opens investigations for potential enforcement actions when appropriate, according to the release.
CFPB examiners also observed some servicers have made significant improvements in the past several years, the release noted.
The CFPB also has published an update to its mortgage servicing exam procedures. Mortgage servicers should note a greater emphasis in exams on the the handling of complaints and requests by troubled borrowers, according to the CFPB. The bureau also is conducting targeted reviews of compliance by mortgage servicers with fair lending and anti-discrimination laws.
The supervisory report is available at: http://www.consumerfinance.gov/data-research/research-reports/supervisory-highlights-mortgage-servicing-special-edition-issue-11/. The updated mortgage servicing exam procedures can be found at: http://www.consumerfinance.gov/policy-compliance/guidance/supervision-examinations/mortgage-servicing-examination-procedures/.