Sec. 2. Findings and purpose
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The Congress finds that— mortgage servicing plays a critical role in determining the likelihood that a delinquent borrower will be able to save their home from foreclosure, but homeowners do not have the ability to choose their mortgage servicers; a 2011 Yale Journal on Regulation article written by Adam Levitin and Tara Twomey, entitled Mortgage Servicing , confirmed that borrowers have no control over what bank or non-bank entity services their mortgage loan, whether the servicing rights on their mortgage are transferred to a new entity, or what contractual provisions govern the servicing of their mortgage loan; a 2011 report entitled Interagency Review of Foreclosure Policies and Practices conducted by the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision acknowledged that a number of supervisory actions and industry reforms are required to address [weaknesses in foreclosure process governance] in a way that will hold servicers accountable for establishing necessary governance and controls ; there has been abundant evidence since the financial crisis of 2007 to 2009 that has indicated that some single-family housing mortgage servicers are failing to provide mortgage borrowers with the protections against foreclosure that they are entitled to by law, including failure to provide mortgage borrowers with critical information about the process of applying for foreclosure relief and loan modifications; multiple congressional hearings have uncovered additional evidence of failures in mortgage servicing, including— the hearing of the Committee on Financial Services of the House of Representatives entitled A Review of Mortgage Servicing Practices and Foreclosure Mitigation , July 25, 2008 (Serial No. 110–132); the hearing of the Subcommittee on Insurance, Housing, and Community Opportunity of the Committee on Financial Services of the House of Representatives entitled Robo-Signing, Chain of Title, Loss Mitigation and Other Issues in Mortgage Servicing , November 18, 2010 (Serial No. 111–166); and the joint hearing of the Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee on Oversight and Investigations of the Committee on Financial Services of the House of Representatives entitled Mortgage Servicing:
An Examination of the Role of Federal Regulators in Settlement Negotiations and the Future of Mortgage Servicing Standards , July 7, 2011 (Serial No. 112–44); in view of the heightened reliance by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) on unilateral reviews of borrowers for loss mitigation in place of reviews of applications initiated by borrowers, there is an increased need for oversight to bring accountability to the loss mitigation review process; mortgage borrowers have also faced other wide-ranging problems with their mortgage servicers, including errors that have cost some borrowers money and have cost others their homes; such problems have included lapses in basic mortgage servicing functions, such as inaccurate monthly statements, improperly credited payments, improper escrow handling, ignored customer complaints, and improper servicing transfers; these failures in mortgage servicing are further evidenced by enforcement actions initiated by the Consumer Financial Protection Bureau against nine different bank and non-bank mortgage servicers from 2013 through 2017 for mismanaging the loss mitigation process , mistreating mortgage borrowers who were trying to save their homes from foreclosure , and failing borrowers at every stage of the mortgage servicing process ; although some Federal regulators, in particular the Federal Housing Finance Agency and the Consumer Financial Protection Bureau, have the authority to take enforcement and supervisory action against mortgage servicers that harm borrowers, Federal regulators should take additional action that will protect homeowners from the types of abuses that have led to stalled modifications, excess fees, and even foreclosure; and to ensure market confidence in the United States housing system and improve accountability and transparency, Federal regulators should be empowered to fully exercise all statutorily mandated and implied powers to protect consumers from harmful mortgage servicers.
It is the purpose of this Act to ensure that mortgage borrowers are protected from abusive servicing practices, to end engagement by mortgage servicers in illegal servicing practices, to keep more people in their homes whenever possible, to promote servicers’ compliance with the loss mitigation guidelines of Fannie Mae and Freddie Mac, and to minimize losses to companies and taxpayers.