Members Urge CFPB to Implement GAO Recommendation to Strengthen Regulatory Oversight
Washington, DC – (RealEstateRama) — United States Senator Elizabeth Warren (D-Mass.), and Congressman Elijah E. Cummings (D-Md.), Ranking Member of the House Committee on Oversight and Government Reform, released a Government Accountability Office (GAO) report that documents the dramatic growth of nonbank mortgage servicers and details the need for stronger regulatory oversight of the industry. GAO produced the report in response to a request from Cummings and Warren.
The GAO report, Nonbank Mortgage Servicers: Existing Regulatory Oversight Could Be Strengthened, shows that by the second quarter of 2015, nonbank servicers serviced nearly 25 percent of all mortgages, up almost fourfold from 6.8 percent in the first quarter of 2012. GAO explains that this growth “has created benefits but also poses risks to consumers, the enterprises, and Ginnie Mae, and others,” and that the nonbank mortgage servicers have “less mature infrastructures relative to banks for tasks such as managing regulatory compliance, risks, and internal controls,” which may cause “problems or errors with account transfers, payment processing, and loss mitigation processing” when mortgages are transferred between servicers.
Responding to GAO’s recommendation that the Consumer Financial Protection Bureau (CFPB) develop comprehensive data on the identity and number of nonbank mortgage servicers, Warren and Cummings wrote today to the Director of the CFPB to urge that the agency implement this recommendation swiftly so that it can build on the work the agency has already conducted in this area to protect consumers. In their letter, Warren and Cummings acknowledge the work done by the CFPB to regulate non-bank servicers. According to GAO, “CFPB’s examinations of nonbank servicers revealed various possible violations of relevant laws and regulations or operational deficiencies, and CFPB required corrective actions to address those deficiencies.”
Cummings and Warren wrote, “Collecting information on and regulating nonbank mortgage services to protect consumers is well within CFPB’s statutory authority and core mission. We hope that you take actions to do so as rapidly as possible,”
A copy of the GAO report is available here, and the letter from Warren and Cummings to the CFPB is available here.