Fair Servicing: Regulators Watch for Discrimination by Servicers

more+
less-

Federal regulators delivered that message in October 2013, reminding loan servicers that they are subject to fair lending liability and must manage their fair lending risks. The regulators’ message concerning “fair servicing” risk has been repeated recently, reflected in settlement provisions that require loan modifications to be implemented in ways that avoid geographical disparities or discrimination against protected classes. For example, the Consumer Financial Protection Bureau (CFPB) included such provisions in the recent consent order it entered into with Ocwen, a large non-bank servicer. Specifically, the consent order resolved claims related to Ocwen’s loss mitigation and foreclosure practices, but it left open the possibility of claims for discrimination. Along with other recent consent orders and regulatory pronouncements, the Ocwen settlement terms indicate regulators are scrutinizing fair servicing issues.

Concerns about fair servicing can arise across asset classes— including mortgage loans, personal loans, student loans, credit cards, and even business loans. Given the heightened regulatory attention to this issue, servicers should develop or enhance proactive risk mitigants, including preventative and detective controls.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  CFPB, Consent Order, Discrimination, Fair Lending, Loan Modifications, Loan Servicer, Risk Management

Published In: Civil Rights Updates, Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin Procter LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »