Oklahoma Bankers Association Counsel Praises New Mortgage Servicing Rules
Brus, Brian, THE JOURNAL RECORD
Response to new mortgage servicing rules released this month by the federal Consumer Financial Protection Bureau has been mixed but surprisingly positive, financial industry experts said.
"It's a nice mix," said Mary Beth Guard, legal counsel for the Oklahoma Bankers Association. "Where the Consumer Financial Protection Bureau had discretion, it has exercised it in such a way that it appears to be very reasonable. There are some bankers who are concerned about the efficacy of some of the new changes.
"We had a number of Oklahoma community banks over the last few years, when we experienced a flurry of new laws and rules, who basically said, 'I'm out of here. The regulations are becoming too burdensome,'" she said. "What I'm telling bankers now is that it's safe to get back in the water."
The more than 3,500 pages of changes are a result of legislative action in 2010 that formed the consumer lending watchdog agency primarily to protect homeowners from unexpected charges levied by mortgage companies. Congress focused on mortgage servicers because those companies were key in the nationwide housing crisis precursor to the recession, foreclosing on homes when borrowers missed payments. Proponents of the CFPB said the mortgage industry could have done more to keep the market healthy.
Guard said some of the changes will have little practical effect on Oklahoma community bankers. Rules addressing the determination of a borrower's ability to repay and what constitutes qualified mortgages are already being followed by most small banks, she said. The new CFPB rules will probably bother large lenders that have been loose with their documentation standards, she said.
Criticisms of the industry have included foreclosures lacking full documentation and an inability of borrowers to shop around to choose a more cost-effective mortgage service, effectively creating a captive market. Buying the rights to collect payments also has been a lucrative practice when new fees are added to late payments.
The overall thrust of the CFPB's rules, which become effective January 2014, is that mortgage services will be expected to help consumers avoid losing their homes, even to the point of disallowing foreclosure processes while a borrower is trying to arrange lower monthly payments.
Some of the CFPB's rules deal with earlier stages of mortgage lending before a consumer gets in trouble. …