CFPB wants to ensure the borrowers have a right to a loan modification and servicers have always had an incentive to help struggling borrowers, according to the Consumer Mortgage Coalition.
“If the liability surrounding mortgage modifications increases because the rules are unclear, the financial equation for the servicer and the lender and investor will change. It may not be in their financial interest to offer as many modification options to consumers because of the unclear rules and associated increased liability,” according to an Aug. 8 CMC letter to the CFPB and other federal regulators.
CMC executive director Anne Canfield points out that CFPB staff has answered some questions orally and informally. “Most questions, however, have no answers. The industry is forced to guess how the CFPB might one day answer the many pending questions.”
CFPB’s servicing rule is slated to go into effect in January 2014.
The CMC executive director said bureau officials use terms and don’t clarify them. “Clarifications have to be made otherwise they are going to thwart their own goals,” Canfield said in an interview.
The CMC letter notes that some of CFPB’s servicing requirements conflict with laws and other regulations.
The new regulation requires servicers to send periodic statements to borrowers that details mortgage payments, escrows and other information. One model statement says, ‘You are late on your mortgage payment. You must pay this amount to bring your loan current.”
Mailing such a statement to borrowers in bankruptcy conflicts with the bankruptcy code’s protection from debt collection.
This could “expose servicers to litigation from bankruptcy-protected consumers who receive the CFPB-mandated periodic statements,” the CMC letter says.