United States

CFPB focuses on mortgage servicing and updates exam procedures


The Consumer Financial Protection Bureau (CFPB or Bureau) announced a change in the focus of its mortgage servicing exam procedures. Historically, supervisory exams of mortgage services concentrated on reviewing for compliance with the 2013 mortgage servicing rules (Rules) and unfair, deceptive and abusive acts or practices.

The Bureau’s findings since the effective date of the Rules as outlined in its Supervisory Highlights Mortgage Servicing Special Edition indicate that many mortgage servicers experienced exam violations because of the use of outdated technology and process breakdowns, especially in the areas of loss mitigation and servicing breakdowns.

To further encourage compliance with regulatory requirements, the Bureau released a third update to the mortgage servicing chapter of the CFPB Supervision and Examination Manual. This update includes a greater emphasis on two areas:

  • Complaint handling and requests by troubled borrowers – The focus of this area is to determine if the servicer has an adequate process for evaluating and escalating complaints or information requests from borrowers facing foreclosure.

  • Discrimination issues – This area concentrates on servicers that are creditors because of activities such as  participating in the determination of whether or not to approve a mortgage loan modification by making sure there is no discrimination in any aspect of the credit transaction.

This concentration by the Bureau on complaint handling and fair lending is not surprising, nor would it be surprising if other regulators’ exam focus shifted in a similar manner.