By Rohit Chopra
Borrowing to buy a home is one of the biggest financial decisions a family will make. Mortgage servicers are the companies responsible for processing payments and managing mortgage accounts, and they play a critical role in assisting homeowners with repayment. Borrowers don’t choose these companies – servicers are chosen by the lender or investor that owns the mortgage.
In the mid-2000s, predatory mortgage practices spread throughout the country. Many large financial institutions with mortgage servicing operations experienced serious breakdowns. This resulted in a crisis where 10 million homes ended up in foreclosure between 2006 and 2014.
The foreclosure crisis was an important catalyst for the creation of the Consumer Financial Protection Bureau. Congress required the CFPB to implement new rules to make the mortgage market work better. These new rules first took effect in 2014. During the COVID-19 pandemic, we saw how these rules worked when unemployment spiked. The CFPB observed that there were places where the rules could be revised to reduce unnecessary complexity.
Last fall, the CFPB asked the public for input on ways to reduce risks for borrowers who experience disruptions in their ability to make mortgage payments, including input on the mortgage forbearance options available to borrowers. In particular, we sought input on the features of pandemic-related forbearance programs and whether there are ways to automate and streamline long-term loss mitigation assistance. We received comments from housing organizations, homeowner advocates, mortgage servicers, and many others.
Many commenters noted that borrowers seeking help on their mortgages can face a paperwork treadmill that hurts both homeowners and mortgage servicers. According to commenters, the temporary pandemic-related changes we made to the mortgage servicing rules helped alleviate this problem and get borrowers accommodations more quickly. Click here to read more
By Rohit Chopra
New digital banking technologies have the power to expand and open market access for American consumers and emerging businesses. In a more competitive market, Americans will be able to earn higher rates on their savings, pay lower rates on their loans, and more efficiently manage their finances. But the new technologies, and the competition they can fuel, have not yet reached their full potential. Consumers continue to encounter all too familiar obstacles when trying to switch banks or apply for loans.
The CFPB is working to accelerate the shift to open banking through a new personal data rights rule intended to break down these obstacles, jumpstart competition, and protect financial privacy. To do this, the CFPB is formalizing an unused legal authority enacted by Congress in 2010. This authority gives consumers the right to control their personal financial data. These rights will become a practical reality after the CFPB implements a rule that sets expectations for the market. We expect to solicit comments on our formal proposal in a few months and finalize in 2024.
But the agency must not micromanage open banking. Fair standards developed by the market to leverage our rule will be critical to the creation and maintenance of an open banking system in which consumers can vote with their feet — and exercise their data rights without being trapped by powerful incumbents and without losing control of their data.
Our proposal will recognize that the CFPB must resolve certain core issues because system participants are deadlocked or because existing approaches do not put consumers fully in the driver’s seat. But many of the details in open banking will be handled through standard-setting outside of the agency. Properly pursued, such standards can allow open banking to evolve as new technologies emerge, new products develop, and new data security challenges arise. Click here to read more