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Inside Washington (04/11/2012)
  • WASHINGTON (4/12/12)--Mortgage servicers say that upcoming proposed rules from the Consumer Financial Protection Bureau (CFPB) will require come at a high compliance expense that could trickle down to borrowers. The proposed rules, scheduled to be made by the CFPB this summer, would require servicers to provide more disclosures and increased assistance for struggling homeowners (American Banker April 11). Servicers would provide monthly mortgage statements and advance notice of interest rate increases for adjustable rate mortgages, and place new limits on force-placed insurance. Servicers would be required to post mortgage payments promptly, and to increase mortgage holder ease of access to their own account information, and to quickly correct account errors. Compliance with the new changes comes down to technology, observers said. Robert Cook, a partner with HudsonCook LLP, said servicing systems will require reprogramming to meet the new requirements. The faster servicers are required to make the change the more expensive it will be, he said. CFPB Director Richard Cordray said Tuesday the agency understands that a one-size-fits-all approach may not be appropriate for smaller institutions such as credit unions and community banks …
  • WASHINGTON (4/12/12)--Edward DeMarco, the acting director of the Federal Housing Finance Agency outlined his objections to allowing Fannie Mae and Freddie Mac to pursue a broad principal forgiveness program for troubled homeowners. "This is not about some huge difference-making program that will rescue the housing market," DeMarco said. "It is a debate about which tools, at the margin, better balance two goals: maximizing assistance to several hundred thousand homeowners while minimizing further cost to all other homeowners and taxpayers." The anticipated benefit of principal forgiveness is that by reducing foreclosures relative to other modification types, losses would be lowered and housing prices would stabilize faster, producing broad market benefits, DeMarco said. However a larger group of underwater borrowers who have remained faithful to paying their mortgage obligations are a greater risk to housing markets and to taxpayers, he added. Encouraging their continued success could have a greater positive impact on the recovery of housing markets, he said …

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