CFPB Mortgage Servicing Standards: A closer look into the last step of readiness preparation for compliance

December 2013
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CFPB Mortgage Servicing Standards: A closer look into the last step of readiness preparation for compliance

At a glance

This edition of the CFPB Mortgage Servicing Standards provides an overview of what a readiness review entails and highlights the importance of performing this validation step.

Since the release of the CFPB’s Mortgage Servicing Rules last January, servicers have been working towards full compliance by January’s effective date. The nature of these efforts has varied across different servicers depending on the magnitude of the gaps between existing processes and the new mortgage servicing standards. Ultimately, servicers are preparing for upcoming CFPB examinations that will require servicers to demonstrate their compliance.

To provide servicers with guidance as to what to expect from a CFPB examination, the CFPB has issued updates to its Supervision and Examination Manual, which it has supplemented with interim procedures for examination of compliance with the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). Both sets of interim procedures describe procedures for CFPB examination of compliance with the new mortgage servicing standards.

In addition, the CFPB specifically encourages servicers to include pre-examination reviews as part of its implementation of the new servicing rules (“2013 CFPB Dodd-Frank Mortgage Rules Readiness Guide” released in July 2013, updated in December 2013). Hence, as a part of the overall CFPB readiness project, those efforts should include the step of conducting a “mock audit” or “pre-exam review” (i.e., readiness review) to prepare for future CFPB examinations of compliance with the new standards.

This edition of the CFPB Mortgage Servicing Standards provides an overview of what a readiness review entails and highlights the importance of performing this validation step.