The Consumer Financial Protection Bureau recently published the eighth edition of its Supervisory Highlights, in which the Bureau “shares recent supervisory observations” touching on several legal topics under its jurisdiction. One of the principal areas covered in this edition is mortgage servicing. Ensuring compliance with the CFPB mortgage servicing rules that went into effect on January 10, 2014 has been a “high priority” for the Bureau. The Supervisory Highlights details mortgage servicer violations in the areas of loss mitigation, foreclosure, periodic statement disclosures, and the Homeowners Protection Act.

Loss Mitigation

- Under Regulation X, a borrower in default may submit a loss mitigation application to the mortgage servicer in hopes of avoiding foreclosure. The mortgage servicer is required to notify the borrower within five days that it has received the application, and provide a list of any additional documents or information that may be required. CFPB examiners noted multiple violations of this rule. Mortgage servicers were cited for failing to send borrowers timely notice acknowledging receipt of a loss mitigation application, and requesting unnecessary or duplicative documents from borrowers. Servicers were also cited for misrepresenting the terms of a loan deferment plan, and for failing to honor a trial modification after the loan had been transferred. The Bureau noted that it was paying close attention to “the risks inherent in transferring loans in loss mitigation, including the risk that information is not accurately transferred between servicers.”