Mortgage servicers can’t hide behind their bad computer systems or outdated technology. There are no excuses for not following federal rules.” – Richard Cordray, Director, CFPB
The Consumer Financial Protection Bureau (CFPB) reported this week that many mortgage servicers are using outdated or deficient technology, resulting in technological breakdowns or malfunctions that are adversely affecting homeowners and violating CFPB rules that went into effect in January 2014.
CFPB investigators found that mortgage servicers using bad computer systems is causing loan modification notices to be sent late, and notices containing incorrect or deceptive information. Homeowners are also getting the runaround from servicers by not honoring a modification that was already in place.
Servicers are responsible for collecting mortgage payments from homeowners and also handling collections and loss mitigation such as loan modifications, short sales and foreclosures. The mortgage servicing industry has been under the regulatory microscope and has paid billions in settling government lawsuits over the last decade for predatory practices and sloppy record keeping.
According to the CFPB, it will seek “specific and credible plans” from servicers describing how they will improve their technology and fix problems examiners identified.