Dealing with residential servicing issues is nothing new for Richard Cordray, the first director of the Consumer Financial Protection Bureau. The former Ohio attorney general says he has been “wrestling with servicing problems” for many years.
Servicing was a great business to be in during the housing boom, Cordray told attendees at a recent U.S. Conference of Mayors meeting. But the processing business became harder when the real estate market went south and borrowers started calling for assistance.
It became a “nightmare,” the CFPB director said. “People got into trouble and no one was ever available to help them.”
Servicer performance is starting to improve since they staffed up, he said, “but they have a long way to go.”
At the CFPB, Cordray plans to address servicing issues through regulations and by “closely” supervising servicers, making sure they are responsive to borrowers and treat them fairly. “We are dead set on trying” to improve their performance, he said.
If necessary, the bureau can sue servicers for violations of federal consumer protection laws. “We have the full authority to address mortgage servicing problems,” he told the U.S. Conference of Mayors.
The CFPB has jurisdiction over servicers owned by large banks with more than $10 billion in assets—and all nonbank servicers. Bureau examiners are preparing to enter the shops of nonbank servicers by March.
The examiners will review servicers' books and their operations. Cordray noted the bureau is fielding consumer complaints and trying to get those complaints resolved.
Due to the settlement talks with the major servicing banks, it appears the bureau will be delaying the examinations of those shops. But the director stressed the CFPB will ensure that “everyone understands there are rules of the road and they are going to be applied evenly to all institutions—big and small, bank and nonbank.”
