Top CFPB Official Vows Crack Down on Mortgage Servicers

'It has felt like Groundhog Day with mortgage servicing for far too long…Groundhog Day is over,' said Steven Antonakes, the deputy director of the CFPB.

No more Mr. Nice Guy.

That was the message that the Consumer Financial Protection Bureau's No. 2 sent to mortgage servicers attending an industry conference on Wednesday. Steven Antonakes, the agency's deputy director, said that servicers have had more than a year to prepare for a reform rule that took effect last month and suggested the CFPB would move quickly and harshly against violators.

Antonakes acknowledged that the agency has previously suggested it would be tolerant of mortgage servicing companies so long as they were making a "good faith effort" to comply with the rule, but he warned that such allowances only extend so far.

"A good faith effort, however, does not mean servicers have the freedom to harm consumers," Antonakes said. "It has felt like 'Groundhog Day' with mortgage servicing for far too long...Please understand, business as usual has ended in mortgage servicing. Groundhog Day is over."

Antonakes' speech was a clear sign that the agency has shifted from its previous message of forbearance to a more hard-lined stance regarding the mortgage servicing rule, which went into effect Jan. 10. (The speech was limited just to servicing, and did not appear directed at bankers still seeking to comply with other new regulations, such as the qualified mortgage and ability to repay rules governing underwriting.)

"My message to you today is a tough one," Antonakes said in prepared remarks before the Mortgage Bankers Association's National Mortgage Servicing Conference in Orlando. "I don't expect a standing ovation when I leave. But I do want you to understand our perspective."

Antonakes defended the rule, saying servicers have had months to bring themselves into compliance and that the agency has made changes in response to industry complaints.

"Servicers have had more than a year now to work on implementation," Antonakes said. "We put out plain-language summaries of the rules and posted video guidance...In addition, as we became aware of critical operational or interpretive issues with our rules, we addressed them."

The speech also made it clear that CFPB officials are frustrated with the mortgage servicing industry's lack of progress in cleaning up its mistakes. It is still widely regarded as rampant with issues, including poor documentation practices, wrongful foreclosures on homeowners and resale problems that make it nearly impossible for borrowers to track down their loan.

More than five years after the financial crisis, Antonakes noted that one in 10 homeowners are still underwater on their mortgages and that "two million households are at high risk of foreclosure."

"Nearly eight years have passed and I remain deeply disappointed by the lack of progress the mortgage servicing industry has made," he said. "In fairness, there have been some improvements. Since 2007 nearly 6.8 million loans have been modified. But despite these advances too many customers continue to receive erratic and unacceptable treatment. Our nation's mortgage servicers manage a debt portfolio of nearly $10 trillion for millions of American homeowners. This kind of continued sloppiness is difficult to comprehend and not acceptable. It is time for the paper chase to end."

The new mortgage servicing rule requires clearer monthly statements and stricter timelines in responding to borrowers. It also bans servicers from dual tracking loan modifications and foreclosure procedures, as well as using force-placed insurance as a regular practice rather than a last resort.

Antonakes said the CFPB would be paying "exceptionally close attention" in making sure servicers send all the information and documents of a loan when it's transferred to another servicer.

"We're going to hold you to that. Servicing transfers where the new servicers are not honoring existing permanent or trial loan modifications will not be tolerated," he said. "There will be no more shell games where the first servicer says the transfer ended all of its responsibility to consumers and the second servicer says it got a data dump missing critical documents."

Comments (4)
I encourage an investigation of Shellpoint Mortgage Servicing. This is not a reputable company. The servicing on my HELOC was transferred to them and my first payment was 11/15/2016. I had auto draft set up. They over drafted my payment by $350. According to my Note they do not have the authority to draft more than the correct payment. I called Shellpoint and the representative told me they "Had problems boarding the loan and it would be corrected with the December payment." The December payment was incorrect and I called again. They said they would research it.

Then the 1/15/2016 was incorrect. I called and the first rep could not answer my questions so she transferred me to another person. The second person told me "This is a known problem. The payments usually re-calibrate in 4 to 6 months." I checked on the website and the February payment is also incorrect.
This company is at best extremely incompetent, and at worst dishonest. I believe dishonest is the best description.

This company needs to be investigated and criminal charges should apply. There are many other complaints on line, and two of my former co-workers are also having the same problems.
Posted by L Persons | Monday, January 30 2017 at 8:23PM ET
Dear Kathleen F,

We are a Mortgage Banker (non-depository) and we service our own loans. Please contact me at bob.sweeney@lhfs.com.
Posted by Bob S | Friday, February 21 2014 at 4:05PM ET
yea most come from nationstar mortgagewhen freddy and fannie went into financial troble all of their top executives went to nationstar as well as the new mortgage servicer compliance officer came from there as well
Posted by james p | Friday, February 21 2014 at 2:09AM ET
Excellent article. Our experience this past year only confirms that the mortgage servicing companies remain incompetent and corrupt. Our credit score is well over 800 and we pay the 20% down and extra principal each month. Imagine our surprise following a refi with New Penn Financial in 2012 to be sold to Selene and then to Resurgent and now effective March 1, 2014 to Shellpoint Partners. Apparently these servicing companies are being run by the same subprime lending executives five years after the crash. Our dealings with Resurgent have been dreadful. I understand that our only option to get out of Resurgent (now Shellpoint) is to refinance. Do you know of any reputable bank who services their own mortgages these days? Unfortunately, the "shell" game continues.

Disappointed in Delaware
Posted by Kathleen F | Thursday, February 20 2014 at 12:24PM ET
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