Dems call for greater nonbank mortgage oversight

Two Democratic lawmakers are calling on the nation’s top consumer protection agency to ramp up its oversight of nonbank mortgage servicers.

Sen. Elizabeth WarrenElizabeth Ann WarrenTrump complains of 'fake polls' after surveys show him trailing multiple Democratic candidates Amazon warehouse workers strike on Prime Day Elizabeth Warren backs Amazon workers striking on Prime Day MORE (Mass.) and Rep. Elijah Cummings (Md.) asked the Consumer Financial Protection Bureau (CFPB) on Monday to identify all of and collect more data on the growing number of financial institutions other than banks that service mortgages.

Warren and Cummings pointed to recommendations from a non-partisan government watchdog report published Monday. Warren, a long-time financial industry watchdog, and Cummings, the top Democrat on the House Oversight Committee, requested the Government Accountability Office (GAO) study. 

“Collecting information on and regulating nonbank mortgage services to protect consumers is well within CFPB’s statutory authority and core mission,” wrote Warren and Cummings in a letter to CFPB Director Richard Cordray. “We hope that you take actions to do so as rapidly as possible.”

The GAO report requested by the lawmakers found that 25 percent of all mortgages were serviced by nonbank entities by the second fiscal quarter of 2015. That’s almost four times as many as were in serviced in 2012, when nonbank entities serviced 6.8 percent of American mortgages.

The report found that nonbank servicers often lack the resources, infrastructure and experience to handle “regulatory compliance, risk and internal controls.” This can lead to errors with transfers and payment processing that could put homeowners at risk of foreclosure.

The report suggested that the CFPB develop a way to track the identity and number of all nonbank mortgage servicers.

Warren and Cummings’ request comes as Republican lawmakers hammer the CFPB for 12 large-scale data collection projects, including one that covers more than 173 million mortgage loans. 

A GAO report from September 2014 found that the scale and execution of those projects generally followed federal guidelines.