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GAO CFPB regulators must add to mortgage oversight
WASHINGTON (5/9/11)—Noting that federal oversight of servicers’ foreclosure activities “has been limited and fragmented,” the U.S. Government Accountability Office (GAO) last week called on the developing Consumer Financial Protection Bureau (CFPB) and fellow regulators to create plans for mortgage servicer oversight. Focus on foreclosure related activities has increased with the recent news of loan and foreclosure documentation issues in several mortgage servicers. As a result, the GAO was tasked with studying past servicer oversight, current and future oversight plans, and the potential impact of those oversight plans. The GAO found that while authorities had the right to examine foreclosure activities, those activities were not looked into, as regulators did not believe that foreclosure practices posed a risk to safety and soundness. The report suggested that the Comptroller of the Currency, the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, and the CFPB all “develop and coordinate plans to provide ongoing oversight and establish clear goals, roles, and timelines for overseeing mortgage servicers under their respective jurisdiction.” These regulators should also create national standards for mortgage servicing and foreclosure practices, the GAO said. That agency also called on regulators to “assess the risks of potential litigation or repurchases due to improper mortgage loan transfer documentation on institutions under their jurisdiction and require that the institutions take action to mitigate the risks, if warranted.” Although credit unions have seen some increases in foreclosure-related activity due to the overall decline in the economy, the majority of credit unions were much more careful in their lending activities, and did not originate toxic mortgages nor engage in the subprime mortgage market. For more on the GAO report, use the resource link.
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