Any loss mitigation agreement that is worked out between the servicer and borrower should be honored by the new servicer, according a bulletin issued by the CFPB Monday afternoon.
The new servicer should properly review “any previous agreements before demanding or collecting amounts due,” the CFPB said. Otherwise, it could present a setback for the borrower and lead to unnecessary foreclosures.
“The CFPB is making these and other servicing transferred-related issues a focus of supervisory activities in the mortgage servicing area,” the bulletin says.
In January, Bank of America sold the servicing rights of 2 million loans to two servicers.
The bulletin also puts servicers on notice that the consumer bureau might require servicers to submit written plans on how they intend to manage “associated consumer risks” during a servicing transfer.
The CFPB examiners will also be looking to see if data and documents from the transferor servicer can be “properly and promptly boarded” by the new servicer’s electronic systems. And the information and documents must be up-to-date.
“A transferor servicer’s policies and procedures must be reasonably designed to ensure that the transfer includes any information reflecting the current status of discussions with the borrower regarding loss mitigation options and any agreement entering into with a borrower,” the bulletin says.