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Inside Washington (09/21/2011)
* WASHINGTON (9/22/11)--Misaligned incentives were a primary reason behind the pervasive problems within the mortgage servicing industry, Raj Date, the de facto head of the Consumer Financial Protection Bureau, said Tuesday (American Banker Sept 21). Date, speaking before the American Banker Regulatory Symposium, said consumers do not choose their mortgage servicers as they do their lenders, which reduces the incentive for servicers to treat borrowers properly. Servicing a delinquent loan costs dramatically more than servicing a performing loan because of the one-on-one contact with borrowers, collection efforts and specialized staff required, Date said. Instead of investing in the necessary resources to properly service delinquent loans, many servicers illegally cut corners and loosened operating protocols. “A comprehensive approach to servicing that protects consumers, investors, the financial sector, and the housing market requires the coordinated action of many federal regulators,” Date said. “With that in mind, the bureau is working with other federal agencies to develop common-sense national servicing standards” … * WASHINGTON (9/22/11)--U.S. Rep. Shelley Moore Capito (R-W. Va.), a member of the House Financial Services Committee, said Tuesday she is disappointed that Republicans have not been able to resolve the future of Fannie Mae and Freddie Mac since taking control of the House in January (American Banker Sept 21). Capito, speaking before the American Banker Regulatory Symposium, said she was surprised the GOP had not accomplished more in regard to the government-sponsored enterprises. Capito, who chairs the House financial institutions and consumer credit subcommittee, said a split among Republicans about how to wind down Freddie and Fannie has contributed to the delay. She said she is not among those in favor of dissolving the government-sponsored enterprises … * WASHINGTON (9/22/11)--The Fourth District Court of Appeals ruled that computer records are “inadmissible hearsay” in foreclosure proceedings, a decistion that could make it more difficult for mortgage servicers to use computer records as evidence without additional verification. The Florida court ruled that Ralph Orsini, an employee at mortgage servicer Home Loan Services Inc., could not rely on computer records to verify the mortgage debt of a delinquent homeowner. The computer records were compiled by the previous servicer of the mortgage, Litton Loan Servicing LLC. Orsini did not verify the information in any other manner. The ruling could have sweeping implications in the lending and loan servicing industries, said Michele Stocker, chair of the financial services litigation practice group at Greenberg Traurig LLP …


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