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September 14, 2012 6:34 am

I appreciate the financial difficulties small servicers may face. However there are options e.g. subservicing, which can lower cost, improve service and comply with the proposed regulations.

If customer service is the goal then the size of servicer should not be a criteria as there are small servicers that do not provide adequate service.

September 21, 2012 1:08 am

I believe that RESPA should be modified and mandate that the servicer acquiring servicing become responsible for all outstanding payments as of the day of transfer and all payments received by either the selling or purchasing servicer on or after that date. The selling servicer should be legally prohibited from contacting the borrower on a transferred loan for purposes of collecting a payment after the transfer date. This prohibition would apply to collecting on NSF checks as well. The purchasing servicer should be obligated to reimburse the selling servicing for NSFs and perform the function of collecting NSF payments. If the borrower maintains that a payment was made to the prior servicer it is the responsibility of the purchasing servicer to collect from the selling purchaser. I am in favor… more »

…of requiring the selling servicer to return any payment not processed as of the transfer date or received after the transfer date to the borrower. The transfer letter should spell this out for the borrower. Fines and penalties should be incurred by the selling servicer if the servicer processes a payment on a transferred loan after the transfer date. Borrowers can obviously provide the necessary information as to who cashed their payment check and when. This can easily be enforced by review/audit of payment and cash deposit records. Any unprocessed payments held at the time of transfer or received after must be forwarded to the purchasing servicer for processing.

Purchasing servicers should not be allowed to pass the buck to the prior servicer. They should be required to make good with the borrower and settle with the selling servicer however they can. The business risk of not being able to collect from the selling servicer should be taken into account as part of the purchase and sale contract. The borrower should not be caught up in an argument between seller and buyer.
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September 26, 2012 1:24 pm

Thanks for your question.
I believe the transferring servicer should not be allowed to contact the borrower subsequent to the transfer date for any reason. If contact is necessary such as to follow up on an NSF the new servicer should be required to make the contact on behalf of the old servicer. Any requests to borrower to send another payment, for example, should come from the new servicer and funds should be sent to the new servicer. This will ensure that the borrower will not get caught up in a dispute between services.

September 26, 2012 11:03 pm

I believe if the suggestion I made was in place you would not have had a bad experience when your loan was transferred. Take a look at it and let me know if you think it would have helped.

September 14, 2012 5:25 pm

Welcome to Regulation Room, peekaboo.

One justification that the CFPB gives for the smaller servicer exemption is that smaller servicers are more likely to have regular interaction with customers, usually from providing other services such as debit cards and checking accounts. The CFPB believes that this gives smaller servicers a greater incentive to stay in touch with borrowers and provide greater service. What do you think about this point?

September 21, 2012 11:13 am

Peekaboo, thank you for sharing your perspective as someone who works for a mortgage servicing company. It sounds like you are saying that size is not the best criteria for deciding who receives an exemption, rather they should be judged on whether they own the mortgage or not. In fact, CFPB only grants the small servicer exception when the servicer “services only mortgages that it (or an affiliate) currently owns or was the original lender for AND services no more than 1,000 closed-end mortgages.” Do you think that the test should only be whether the servicer services only mortgages that it currently owns or originated? What do others think of this proposal?

September 21, 2012 10:09 pm

Hi peekaboo, thank you for your comment. Are you saying that you support CFPB’s proposal in the section on getting info to the new servicer, which would require old servicers to forward payments received up to 60 days after the transfer to new servicers? It sounds like you’re concerned that borrowers could have both the old and new servicers demanding payment for the same month. Do CFPB’s other proposals on transferring information to new servicers solve that concern, or do you propose an additional layer of protection?

September 22, 2012 12:39 pm

I disagree with the “send it back to the borrower” idea. This does not make sense and does not benefit the borrower. This will only incur late fees to the benefit of the servicers. The borrower should be able to send payments to the old servicer up to 60 days after the transfer date without fear that the payment will not be applied. The borrower should only be concerned with making the payment on time. The old and new servicer are already in a contractual agreement, so tranferring the payment from the old servicer to the new servicer is a simple electronic transaction. It is applied on the same day the old servicer recieves the payment from the borrower. So this talk about sending payments back to the borrower is detrimental to the borrower, this is against the entire purpose of… more »

…the CFPB protecting the borrower. Do not send payments back to the borrower! The old and new servicer shall implement policies and procedures to ensure the payment is posted correctly by either servicer. « less

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