CFPB Publishes Compliance Bulletin And Policy Guidance For Mortgage Servicing Transfers

On October 22, the CFPB published in the Federal Register the compliance bulletin and policy guidance regarding mortgage servicing transfers that it issued on August 19, 2014 (link to full text can be found here). It states that "[t]his bulletin is effective October 23, 2014 and applicable beginning August 19, 2014." The bulletin is designed to protect consumers from the potential risks that "may arise in connection with transfers of mortgage servicing rights."

The new guidance updates and replaces CFPB Bulletin 2013-01, released in February 2013, which also related to servicing transfers. The CFPB uses the new guidance to reinforce three messages that it has previously sent to the servicing industry. First, the CFPB expects all mortgage servicers to maintain a "robust" compliance management system. Second, the CFPB will continue to closely monitor the mortgage servicing industry and may engage in additional rulemaking in this area. Finally, the CFPB maintains that its continued focus on this area is due to the continuing high volume of servicing transfers.

The new guidance reinforces the principles contained in the original guidance and adds several aspects of mortgage servicing that will be subject to further regulation. The new guidance sets forth two new sections. The first, entitled "General Transfer-Related Policies and Procedures," provides examples of policies and procedures that CFPB examiners may consider when reviewing whether servicers have fulfilled their transfer-related responsibilities. One example of these policies and procedures is "[e]nsuring that contracts require the transferor to provide all necessary documents...