CFPB Extends Fair Lending to Include Fair Servicing

The Consumer Financial Protection Bureau is intensely focused on fair lending as well as fair servicing, according to Amy Brachio, a partner at Ernst & Young advisory services.

“From a servicing prospective, the concept of fair lending is very tricky,” she told a mortgage regulatory forum sponsored by NMN

“It is hard to define what is a good outcome and what is a bad outcome.”

For example, is it good to take a long a time to make a decision on a foreclosure if it allows the family to remain in the home longer? Or is it bad because of the uncertainty they have to live with? “You have to look at what the intent of the borrower is,” she said. “Do they want to stay in their house?”

Meanwhile, the CFPB has embedded fair lending into all of its examinations. And it will be looking to see if an institution’s servicing practices negatively impact certain neighborhoods or groups.

Examiners are looking within the servicer’s population of loan modifications to see if different groups end up with different terms.

They are looking at maintenance policies to see if the upkeep of REO is adequate in some neighborhoods, but contributing to blight in others.

“Those are the kind of things you really ought to step back and think about,” Brachio told the audience.

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