Following the Consumer Financial Protection Bureau’s announcement last week that it would seek to impose new rules on the mortgage servicing industry, some big bank servicers may be poised to rid themselves of their servicing units.
Under the proposed rules, financial institutions that manage home mortgages must allow “direct, ongoing” access to their staff members in order to assist borrowers who are trying to avoid foreclosure. Mortgage servicers must also stay any foreclosure proceedings while borrowers apply for modification of loan terms. Furthermore, servicers must inform borrowers of their options if they are in danger of foreclosure, Huffington Post reports.
“The inadequate performance of many mortgage servicers has helped widen the misery for many Americans,” Richard Cordray, director of the CFPB, said, according to Huffington Post. “Right now, people have too little protection under federal law if their mortgage servicer surprises them with costly fees or gives them the runaround.”
Isaac Boltansky, an analyst at Compass Point Research and Trading, recently said that the new rules support “a secular shift in the mortgage servicing industry” to specialty servicers.
“We expect the big bank servicers to offload a sizable portion of their servicing assets,” Boltansky said, The Washington Post reports.
The comment period on the proposed rules will be open until Oct. 9. Submissions will be reviewed by the CFPB before issuing final rules in January 2013.