The first Consumer Financial Protection Bureau exams into mortgage servicers will result in corrective actions for several firms, according to the bureau director Richard Cordray.
“We have the ability to examine mortgage servicers and send in examination teams. We have been doing that with different servicers. That’s been insightful for us. It will lead to corrective actions in a number of instances where they have not been up to snuff,” Cordray told a House committee Thursday.
The exams began in February. The bureau looks at how servicers are complying to existing federal laws and will identify risks of possible violations. The CFPB also takes into account how consumer complaints and loan transfers are handled.
A bureau spokesperson said the firms that had undergone exams so far would be kept confidential.
Cordray did not specify what “corrective actions” could include. But the bureau levied its first enforcement action against Capital One this year over certain credit card violations. The bank had to refund customers $140 million.
The bureau will finalize rules in January governing future servicing standards. The proposal released in August covers what monthly disclosures servicers will be required to make to borrowers and when to provide options for avoiding foreclosure.
Many servicers are already adapting to similar rules under the $25 billion robo-signing settlement struck in March. JPMorgan Chase (JPM) and Wells Fargo (WFC), for instance, have already installed single points of contact for distressed borrowers, according to sources familiar with the developments.
Cordray said not every servicing company has problems, but the industry as a whole has a lot of work to do.
“In the mortgage servicing industry, things have not moved smoothly over the past five to six years,” Cordray told the committee. “It’s a troubled area.”
