CFPB Issues Warning To Mortgage Servicers

On February 11, 2013, in response to the increased volume of mortgage servicing transfers and the potential impact of these transfers on consumers, the Consumer Financial Protection Bureau (CFPB) issued a bulletin to mortgage servicers, both banks and nonbanks, advising them of their legal obligations to protect consumers during loan transfers.  The bulletin indicates that the CFPB is particularly concerned about lost paperwork during transfers, service interruptions when loans are transferred during the loss mitigation process, and wrongful foreclosures. 

Specifically, the CFPB stated that its examiners will focus on:

How a servicer has prepared for the transfer of servicing rights and/or responsibilities:   This will focus on procedures servicers have in place to ensure a smooth transfer of information that does not result in a disruption of services to consumers, as well the plans and procedures of both the old and new servicers to respond to consumer questions