Profile: cu man
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Hi cu man, and welcome to Regulation Room! CFPB is interested in what sort of burdens the new rules will impose on servicers. It sounds like your credit union’s warning practices are similar to what CFPB is proposing. You might also like to check out the continuity of contact and information request requirements to see how they compare with your credit union’s current practices.
cu man, do you think CFPB’s standardized requirements for periodic statements could lower costs over time since the third parties who handle statements would use essentially the same form for all lenders? Or are there other costs that you see?
CFPB has published a sample format for statements that you can see here. Would that form include all relevant information your credit union wants to send borrowers? Would using that form solve the safe harbor problem you identified?
cu man, thanks for sharing your experiences with how lenders’ computing systems work. This kind of on the ground perspective is helpful. Do you think that even if the borrower can’t access information in real time online, the information is accessible enough for servicers to answer the borrower’s question in the timeframe CFPB proposes?
Several other commenters have raised your concern about the possible lack of a paper trail. Does the 5 day deadline for the servicer to confirm they received the borrower’s request help solve the problem? Do you have other suggestions on how to make it easier for borrowers to request the information they need?
I don’t understand how paying an insurance policy for a Non-Escrow loan is so difficult. You know the process already because you’re obviously already doing it for Escrow loans. I’m not seeing the difficulty in providing the same service to Non-Escrow customers. Don’t you keep a database of who is agent or company billed for your Escrow customers? The systems are clearly in place by your own admission. You’re just adding more volume, so hire a few more people.
Your arguments make no sense. As an expert in the loan tracking industry, I can 100% indisputably tell you that there is no extra cost whatsoever to treating a non-escrow and an escrow loan the same. You’re flat out lying, and I have to call you out. I’ve worked in every loan tracking system, and if you’d like to contact me for a free consultation on your credit union’s loan servicing software, simply do a google search for Versability or “The Boy Who Cried Force Placed Insurance” and I’d be more than happy to consult your supposed Credit Union on how to accomplish this at absolutely no cost. Otherwise I’d thank you to stop lying in this forum, because I know better and I WILL call out your lies.
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I work at a federal credit union. We currently send out three warning letters (over a 90 day period) prior to force placing insurance. The letters are progressively stern starting with the friendly reminder to finally informing the borrower what the cost will be. The letter s have our name and return address on the envelope and do not look like junk mail. You would be surprised how many people ignore them until they receive the fourth letter which details the amount added to their loan to cover the CPI. Only then do they call us.
As a lender I make no money from CPI and, more often than not, have to charge off the cost when the debt goes bad. But, the alternative of not having the property insured is too great a risk.
If there is no escrow for insurance the idea of the lender… more »
Two points:
1. For most small to mid-size lenders the actual statements are outsourced to a third party due to the cost of creating something in house. Therefore the ability to change the format of a statement is not only limited but very expensive. In a time of ever shrinking margins (Yes, even a credit union needs to earn money) this is a cost that just cannot be easily absorbed.
2. If the CFPB is going to require changes to a statement they should create a safe harbor format to shield FI’s from being sued by lawyers looking to make money and not protect consumers.
As someone who has been in the industry for well over a quarter I can give some insight here.
For a small to midsize lender the mortgages will often be stored on a system that is not connected in real time to your core processing system. This would prevent someone from being able to view their mortgage on their home banking page. It’s not meant to be secretive but it is just a fact that different computer systems often do not communicate with each other.
I am against having oral and written requests being treated equally. Written requests have, by their nature, a more formal stature and create a paper trail. An oral request will create a “he said, she said” conflict.
I did look at the from and it does include the information we send. As for safe harbor some other regs specifically state if a FI uses that format they are protected from liability. The CFPB should do the same.
Having spent so long dealing with vendors I do not anticipate a cost savings. If anything, I can see a “compliance surcharge” being added.
“…so hire a few more people.”
First, where do I get the funds to pay these people? We operate on a razor thin margin. If I hired “a few more people” for every regulation I would lose money and no longer be in business. A credit union is a not for profit enterprise but it cannot lose money and remain in business.
Second, while a data base is in place for escrow accounts no such system exists for non-escrow accounts. Go back and read my post. Who do I pay? The insurance company directly or an agent? Once insurance is force placed things go downhill very quickly and the chance of my getting paid back is slim to none. Even if I could find out who to pay I am not going to misuse the credit union’s funds to pay for additional riders on a homeowner’s policy.
….and so ends any attempt at civility. Really, there is no need to lob “three score barrels of powder” at me.