S&P: As Regulations In Residential Servicing Loosen, Challenges Will Still Remain

paper, Are Loosening Regulations A Silver Lining (Playbook) For Residential Servicers, Or Is This Simply Groundhog Day?, noted the Senate Banking Committee approved a new head of the Consumer Financial Protection Bureau, Kathleen Kraninger, “who will likely take a less assertive regulatory approach.”

Furthermore, S&P noted the CFPB disbanded and subsequently reorganized its Consumer Advisory Board in June 2018 and dropped certain higher-profile mortgage-related actions in 2018 against companies.

“While these actions are backed by recent statements by certain federal regulatory bodies that suggest an easing of regulations, challenges aren’t over for residential mortgage servicers,” S&P said. “In particular, states, including Pennsylvania and New Jersey, have expressed their desire to create state-level consumer enforcement agencies, like the CFPB, to fill a perceived void at the federal level. In addition, the Multistate Mortgage Committee has been active in reaching servicing-related settlements.”

S&P said the regulatory environment will “remain uncertain” as the Bureau’s regulatory routines and enforcement protocols with servicers evolve. “State governments and the MMC remain uncertain challenges for servicers as new state-level consumer protection units take form and as states continue to work together to investigate and bring about enforcement actions,” S&P said. “Therefore, servicers will likely still be diligent in identifying possible regulatory issues at the federal, state or municipal levels.”