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American Banker CFPB Comment

American Banker CFPB Comment

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Published by Sunlight Foundation
American Banker's response to hearing on mortgage servicing standards.
American Banker's response to hearing on mortgage servicing standards.

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Published by: Sunlight Foundation on Jul 13, 2011
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4 of 1000 DOCUMENTSAmerican BankerJuly 8, 2011 Friday
GOP Grills CFPB No. 2 On Servicer Settlement
Kevin Wack 
WASHINGTON; Pg. 1 Vol. 178 No. F326
970 wordsWASHINGTON -The topic of a
hearing Thursday was supposed to be mortgage servicing standards, but thetarget was really the Consumer Financial Protection Bureau.GOP lawmakers on two Financial Services subcommittees sharply questioned Raj Date, the agency's No. 2 official,arguing the bureau had improperly interfered with a pending settlement between the state attorneys general and severallarge mortgage servicers."The CFPB has been extremely involved in these mortgage negotiations," Rep. Randy Neugebauer, chairman of the
Financial Services
subcommittee said while raising questions about the bureau's statements about itsinvolvement. "I think it's really troubling."Date defended the agency, which he said had been providing advice to the state AGs as they worked out issues with thebanks. Treasury Secretary Tim Geithner has said he asked the consumer bureau and its temporary leader, Elizabeth
, to help the AGs.In the face of Republican charges that the bureau has changed its story over time, Date maintained that the bureau hasbeen consistent about its role. "I do feel that the response has been unambiguous over time," he said.Although GOP lawmakers said they had received a set of emails about the bureau's involvement with settlement talks,at least some of the information appears already to have been made public. (Republicans have not yet released theemails.)GOP lawmakers pointed to a presentation by the bureau, first released months ago by The Huffington Post, whichestimates that shoddy servicing practices saved banks $25 billion, and suggested that settlement funds be used to pay forprincipal reductions.Rep. Sean Duffy, R-Wis., told Date that both the
and Senate have rejected proposals for principal writedowns of mortgages."And so the Congress has rejected these ideas," he told Date. "You say, 'No, no, no, this is an appropriate form of settlement.' ... I take some form of offense to that."But Date said that the CFPB was discussing the idea in the context of a voluntary settlement with banks, rather than as achange in the law.Page 1
"That is an idea that we have presented in the past ... as part of a broader settlement," Date said.Jennifer Howard, a spokeswoman for the bureau, released a statement after the hearing about the documents that wereprovided Tuesday to
Republicans."The documents produced for Congress this week by the Treasury Department reflect inter-agency collaboration andadvice," the bureau said."The documents also reflect discussions with industry to better understand the servicing market the CFPB will oversee.But to be clear: The Department of Justice and other federal and state officials are currently conducting negotiations of the terms of a potential settlement with mortgage servicers. The CFPB is not."The documents included an email exchange between
, Date and Richard Davis, the chairman and chief executive of U.S. Bancorp. While the emails were not made public, the exchanges seemed to reflect an attempt by theCFPB officials to understand how the servicing industry determines under what circumstances it is appropriate to granta loan modification. Based on public discussion of the documents, neither
nor Date appeared to be requiring orsuggesting that U.S. Bancorp change its practices.When asked whether the CFPB is soliciting opinions from mortgage servicers about what would be workable, Datesaid: "It would not surprise me. I solicit opinions about a great number of things related to the mortgage industry."The GOP's attacks on the bureau and on
drew a fiery response from Rep. Barney Frank, D-Mass., the topDemocrat on the
Financial Services Committee."There is an obsession with Elizabeth
, and let's be clear where it comes from," Frank said. "It comes frompeople who didn't want an independent consumer agency."He added sarcastically, "Shame on her that she would actually sit down and come up with what she thought was bestand then present it in a noncoercive way."The bureau was established as part of the Dodd-Frank Act enacted last July. It has been building a staff, but it does nottake over responsibility as the consumer protection regulator of banks until July 21.
, a Harvard Law professor who championed the idea of an independent consumer financial protection agency,has faced criticism from
Republicans in a series of hearings before the CFPB begins its supervision of banks.She appeared before the
Financial Services Committee on March 16 and the
House Oversight
Committee onMay 24. She is scheduled to return to the
House Oversight
Committee on July 14.On Thursday, Democrats complained that much of the hearing focused on the bureau rather than about the problemswith mortgage servicing, including forged signatures, lost paperwork, improperly notarized documents, and inflatedfees."For me the hearing is not about the role of the CFPB in the settlement negotiations," said Rep. Carolyn Maloney,D-N.Y. "It should be about allegations of abuse in the servicing industry."In addition to the state negotiations, which have been led by Iowa Attorney General Tom Miller, the robo-signingscandal led to a review by federal banking regulators of the servicing and foreclosure processing practices of largemortgage servicers.That review found what were deemed critical deficiencies. It resulted in cease-and-desist orders in April against the 14largest federally regulated servicers."By emphasizing timeliness and cost efficiency over quality and accuracy," Julie Williams, chief counsel of the OfficePage 2GOP Grills CFPB No. 2 On Servicer Settlement American Banker July 8, 2011 Friday

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