A regulatory response to problems in mortgage servicing must fix problems in the industry but avoid poorly conceived actions that would crimp American families’ access to mortgage financing and threaten the still-weak housing recovery and the broader economy.
The problems in mortgage servicing are genuinely infuriating, including robo-signing of foreclosure documents, spotty communications with delinquent borrowers, and especially the foreclosure proceedings on some active duty service members.
These problems are being fixed by tough new regulations from the Office of the Comptroller of the Currency (OCC). Mortgage servicers will be required to establish clear lines of communication with borrowers facing foreclosure, improve their systems for handling documents, and stop foreclosure proceedings when discussing a loan modification. Companies will compensate borrowers who lost money as the result of servicing problems including any inappropriate foreclosures, and will be required to hire outside consultants to make sure the problems are fixed. Servicers have already announced plans for massive hiring to comply.