CFPB SERVICING RULE FIASCO

On May 4th the Consumer Financial Protection Bureau (CFPB) announced plans to assess the effectiveness of the Real Estate Settlement Procedures Act (RESPA) mortgage servicing rule. The announcement accurately reports that the CFPB issued the 2013 RESPA Servicing Final Rule in January 2013. That rule was amended a few times before it took effect on January 10, 2014.

The Dodd-Frank Act requires the CFPB to conduct assessments of certain rules within five years after they take effect. Now the CFPB is conducting the required assessment of the RESPA mortgage servicing rule, and will issue a report of the assessment by January 2019. As required by law, the assessment will address the rule’s effectiveness in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals of the rule, using available evidence and data.

An important detailed, mentioned only in a footnote, is that the agency published major revisions to the Servicing Rules on October 19, 2016. Those final rules are effective in part on October 19, 2017 and in full on April 19, 2018. So basically the CFPB is asking the world to comment on the effectiveness of a set of rules that have been screwed up from day one and that are in the middle of change. They want us to comment on the 2014 Rule, but not to comment on the pending changes that revise the 2014 Rule. This is akin to asking the appraiser to value a property based on its condition prior to the major remodeling that is currently underway.

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