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CFPB Sends a Message, Loud and Clear

MAR 5, 2014 3:44pm ET
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Last month, as I sat in an Orlando convention center ballroom during the annual MBA Servicing Conference, I noted that the sense of anticipation for the remarks of CFPB Deputy Director Steven Antonakes seemed to range from "not that interested" to "just trying to get a sense of what's next from the bureau."

As Antonakes took the stage, attendees were still streaming in following the warm remarks of Bill Cosgrove, 2014 chairman-elect of Mortgage Bankers Association, and David Stevens, president and chief executive officer of the Mortgage Bankers Association. It was soon evident that many of the attendees had not expected to be on the receiving end of the candidly harsh tone Antonakes employed during his speech.

"Nearly eight years have passed and I remain deeply disappointed by the lack of progress the mortgage servicing industry has made," Antonakes said.

Citing the number of foreclosures and homeowners still under water with their mortgages, Antonakes did not shy away from pointing the finger directly at the servicers filling the audience before him. "This kind of continued sloppiness is difficult to comprehend and not acceptable. It is time for the paper chase to end," said Antonakes.

Noting that he did not expect a standing ovation from the crowd, Antonakes certainly did not receive one.

Fortunately, for those in attendance willing to seek it out, commentary at other sessions of the conference appeared to demonstrate that the CFPB was willing to work with servicers going forward rather than simply laying the blame on them for problems in the past.

Kelly Cochran, CFPB assistant director for regulations, emphasized that the bureau was indeed in a transition period from implementing new rules to monitoring and refinement of those rules. She noted that rulemaking was continuing and that the expectation was for debt collection in general to be an ongoing focus of the bureau.

CFPB program manager for mortgage servicing, Allison Brown, served on the panel for a session entitled "Lessons from the Industry on CFPB Servicing Exams." Brown stated that a high number of consumer complaints received by the bureau still related to mortgage servicing and that the bureau's 320 examiners were continuing to find serious problems. She discussed an ongoing issue with the transfer of servicing rights for loans with an approved loan modification in place and subsequent issues with the new servicer honoring the terms of the modification.

Despite her concerns, Brown urged attendees to work with the CFPB in crafting or modifying regulations, and she seemed to express a genuine willingness to work with servicers.

Antonakes' comments have been circulated far and wide in the industry. There is still much uncertainty as the CFPB moves into enforcement mode. The message at the MBA Servicing Conference seemed to be that the time is now for servicers to refine their compliance management, and they should not expect the scrutiny to fade anytime soon.

Courtney Gilmer is a shareholder in the Nashville office of Baker Donelson. She represents lenders, businesses, secured creditors and creditor committees in bankruptcy proceedings, financial transactions, corporate reorganizations, and state and federal court litigation.

Comments (4)
And what state has the highest per capita CFPB complaints? Why New Hampshire of course. Take a visit to Senator Kelly Ayotte's Office and to her town forum to see how and why just cut, paste and Google:

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Sunday, February 16, 2014

KingCast and Mortgage Movies Laugh as Senator Kelly Ayotte's New Hampshire Has Highest Per Capita Complaints to the CFPB.

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It's funny... first I worked with Kent Markus and Richard Cordray as an AAG, then I lived in NH where I was a closing attorney during Ayotte's administration. She is and was, Bad News.
Posted by | Thursday, March 06 2014 at 3:05PM ET
"it is time for the paper chase to end" This is so true having been on the receiving end of the lost documents era all I can say is it is about time and this is long overdue. Servicers need to hire the right people and the paper chase should end !Sylvia McNeal Real Estate Broker
Posted by SYLVIA M | Thursday, March 06 2014 at 4:52PM ET
Problems still exist. Papers get lost. People have issues, but the majority of modifications, loans transferred, payments posted, insurance & taxes paid, etc., happen on time and properly. I don't blame any auditor or regulatory agency for focusing on the outstanding issues/problems, but the progress made, the incredible successful efforts on millions of loans deserve a pat on the back for a job well done. One must always attempt to be better at what one does. The Industry is moving and has been moving in the right direction for some time now in the middle of years of changing regulation, regulatory uncertainty and volumes that were almost impossible to forecast or handle under old assumptions and timelines. No one, including the regulators, had a crystal ball. Speaking to Industry leaders as if they are the ones responsible for the people in default or those losing their homes is not the way to approach the challenges we still face together. If we face them together, and we surely do, we must work together as a team to make things more efficient and as painless as possible for all involved. The regulatory agencies, the Congress, FNMA, FHLMC and others are not innocent bystanders in all this. Everyone, at some point in time, played a part in what became an industry and a world catastrophe. The clean up from this devastation is not something that is going to be 100% corrected when the multitude of issues, layered one on top of the other, under ever changing rules and regulations, in an economy that is still far from helping the default situation, just go away and be fixed. It took years to get where we are today and everyone on all sides participated in getting us here. We must concentrate on the progress made as well as what we need to do going forward. The consolidation in this industry took well over 10 years to happen. The operational model could have never anticipated the perfect storm that occurred. There is enough blame to go around, but at this point blame is not the tool that is needed to repair what is left to accomplish. Fear can be a motivator, but it is rarely the best tool for lasting progress and success. And capital rules and regulations that further cause consolidation of huge portfolios of Servicing Rights under a few Servicers, seems like another step in the wrong direction. Making decisions that are emotional, during a time when the pendulum had swung way to far, one way or the other, is not the balanced well thought out approach that is necessary for all to succeed on a long term basis. Closing to amazing organizations, FNMA & FHLMC, or drastically changing them, when they worked so well for so long, also seems to be more political then not and also made under emotional circumstance, while the pendulum was still far from it's normal equilibrium. Decisions made when trajectory is so far away from normal, need to consider the current and the historical placements before changing the space and the time we work and operate in. Let us be strategic about this and work together for the betterment of all. If by changing things to fix certain issues, as real as they may be,we change an industry that has been the envy of the world for so many years, an engine that has fueled growth in this economy for so long, and make it a shadow of itself, boxed in, hampered, it will hurt the very people we are attempting as a Nation to put back to work and to narrow the economic gap. It is time to wake up and look at this thing honestly from all sides!!!
Posted by ROBERT R | Thursday, March 06 2014 at 9:39PM ET
CFPB program manager for mortgage servicing, Allison Brown was up to her eyeballs in USA/Curry v Fairbanks back in 2004 when she was still with the FTC. That was more or less freshman year for Mortgage Servicing Fraud, although that "investigation" began closer to 1999 if the Civil Investigative Demands to Fairbanks and Harmon Law Offices of MA, NH and RI among others are any indication.

The result of that "effort" was a voluntary settlement by Fairbanks (n/k/a Select Portfolio Servicing) of $40-55M depending on which numbers you believe, in exchange for admitting no wrongdoing. That translated to roughly $143.00 for each of the 280,000 opt in class members while the 25 law firms involved split $8.75M.

Point being that the number of apparently ineffective FTC people who transferred to CFPB was, and continues to be, a concern for me and I can only assume the other 29 New Hampshire Fairbanks victims who were bounced from Banking to DOJ and ultimately landed at the FTC only to find little to no help anywhere along the line. Then, of course, there are all of the OTHER Mortgage Servicing Fraud victims suffering as well.
Posted by | Wednesday, March 12 2014 at 10:19AM ET
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