Housing industry and consumer advocacy groups say they generally agree with the goals of
Key sticking points broadly agreed on in the revamp of Regulation X are some operational requirements aimed at meeting the needs of borrowers with language access issues. Industry groups also oppose a fee ban it proposed for distressed borrowers.
These and the more expansive range of issues raised in feedback the Consumer Financial Protection Bureau received center on questions about whether all parts of its new requirements can be operationalized in ways that accomplish their aims and are within the bureau's authority.
In the first instance, a coalition of 10 groups is concerned mandates around communications with borrowers who have limited English proficiency lack definition. They show particular concern in regard to language preferences that servicers "should have known" about based on practices at the time of origination.
This is not "tracked or monitored across companies in a way that would enable one company to determine whether a borrower received non-English marketing materials or conversed with another company's loan officer in a language other than English," the coalition said in a letter.
"This is particularly true when the entity that serviced the loan is distinct from the entity that originated the loan," members of the coalition added.
The Housing Policy Council, Mortgage Bankers Association,
"We encourage the bureau to remove the marketing section and pursue operationally feasible policies that will enhance assistance to borrowers with limited English proficiency," they concluded.
Another part of the proposed requirements that industry groups would like to see removed is a fee restriction for distressed borrowers reviewing their options.
The MBA recommends eliminating such a restriction because of the need to pass some costs on to borrowers. In a separate letter, the Housing Policy Council asserted that certain efforts to curb fees would constitute regulatory overreach.
"The fee prohibitions exceed the CFPB's statutory authority," President Ed DeMarco said in the council's letter.
The council recommends against restrictions in general but asserted that if the bureau does move forward with some, "it must limit any such prohibition to servicer fees, such as late fees and stop-payment fees, and exclude third-party costs and accrued interest."
Charges outside of servicer fees "are pass-through charges the servicer incurs to meet investor and/state requirements, or to maintain vacant properties and avoid community blight.
"The servicer cannot be expected to waive recovery of and absorb these costs on behalf of other parties," the council said in its letter.
The HPC's detailed letter also calls for a full re-do of the proposal's cost-benefit analysis and more clarity on guardrails aimed at discouraging
The council recommends making a distinction between the way "retention" and "disposition" options for borrowers are treated in dual tracking. The latter involve situations where borrowers allow a home sale outside foreclosure because it may be more financially advantageous and less damaging to their credit than the alternative.
The HPC recommends only including retention efforts in the dual-tracking definition because it would otherwise limit the time during which investors would want to make disposition options available.
"This outcome would harm both borrowers and investors, directly contrary to the concept of loss mitigation," DeMarco said.
