Senator calls for investigation of nonbank servicers

by Ray Leone22 Oct 2014
Earlier this week Senator Elizabeth Warren (D-Mass.) and Congressman Elijah Cummings (D-Md.) called on the U.S. Government Accountability Office (OIG) to investigate nonbank mortgage lenders and the risks they pose to consumers.

In the letter written by Warren, she notes that the number of lawsuits filed against these firms has increased and that they are not regulated as strictly as banks. Warren, who is active in Washington’s fight for financial reform, also helped establish the Consumer Financial Protection Bureau.

She suggests they are worried about the growing share of nonbanks servicing mortgages. She cites a July 2014 FHFA-OIG report that showed nonbank special servicers hold approximately $1.4 trillion in mortgage servicing rights out of a nearly $10 trillion market.

Also in the letter, she urges the GAO to investigate the structure of nonbank lenders and how their consumers might be harmed during an economic downturn. “We are writing to request a study of the vulnerability of nonbank mortgage servicers to economic downturns given the lack of capital requirements applicable to these servicers and of the risks posed to consumers by continued growth in nonbank specialty mortgage servicing," she writes.

Click here to read Warren’s letter.