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The Consumer Financial Protection Bureau (CFPB) came under criticism from another federal entity: The Government Accounting Office (GAO) who issued a report questioning the Bureau’s ability to properly regulate non-bank servicers.
“Non-bank servicers are generally subject to oversight by federal and state regulators and monitoring by market participants, such as Fannie Mae and Freddie Mac,” said the GAO in its report. “In particular, CFPB directly oversees non-bank servicers as part of its responsibility to help ensure compliance with federal laws governing mortgage lending and consumer financial protection. However, CFPB does not have a mechanism to develop a comprehensive list of non-bank servicers and, therefore, does not have a full record of entities under its purview. As a result, CFPB may not be able to comprehensively enforce compliance with consumer financial laws.”
The GAO report also observed that the Federal Housing Finance Agency (FHFA) lacked the statutory authority to examine non-bank servicers in order to “identify and address deficiencies that could affect” Fannie Mae and Freddie Mac.
“Congress should consider granting FHFA authority to examine third parties that do business with the [government-sponsored] enterprises,” the GAO report recommended. “In addition, CFPB should take steps to collect more data on the identity and number of non-bank servicers. FHFA agreed that there should be parity among financial institution regulators in oversight authority of regulated entities and third parties they do business with. CFPB agreed that more data could supplement existing information but noted that the current data limitation does not materially affect its work. To improve its ability to monitor the consumer effect of non-bank servicers, the [CFPB director] should take action to collect comprehensive data on the identity and number of non-bank mortgage servicers in the market—for example, by requiring the registration of all non-bank entities or the use of legal entity identifiers.”