Oct. 13 (Bloomberg) -- The U.S. Consumer Financial Protection Bureau said it will focus on mortgage servicing as it begins supervision of the nation’s largest banks.
“Mortgage servicing has a huge impact on consumers and is a priority for the CFPB,” Raj Date, special adviser to the Treasury Secretary for the consumer bureau, said in an e-mailed statement today.
“We are going to take a close and measured look at whether servicers are following the law,” he said.
The supervisory program will focus initially on loans that are in default and homeowners who are struggling to make payments, the bureau said in the statement.
For example, the bureau will examine loan modification procedures to ensure that servicers are “providing information about alternatives to foreclosure that is accurate, prominent and clear,” the statement said. The agency will scrutinize the foreclosure process to make sure that “the borrower is actually in default and all of the necessary records have been carefully reviewed.”
It will also look at the fees charged to borrowers who are in default “to make sure they are not duplicative or otherwise illegal,” according to the statement.
The consumer agency, which was created by the Dodd-Frank regulatory law of 2010, made the announcement as it also released the first edition of its examination manual, the document that tells bureau employees and the banks how it will conduct its oversight.
Exam procedures will “evolve over time,” Date said in a telephone conference with reporters.
On July 21, the new agency officially took over banking supervision for consumer issues. Its authority is limited to those U.S. banks, currently 105, who have more than $10 billion in assets.
State attorneys general are negotiating with major mortgage servicers, including JPMorgan Chase & Co. and Bank of America Corp., on a settlement to resolve claims of abusive practices. An agreement is “essentially done” on the standards for how banks will service mortgages, Iowa Assistant Attorney General Patrick Madigan said in an interview.
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