The Government Accountability Office said that nonbank mortgage servicers need more oversight from both the Federal Housing Finance Agency and the Consumer Financial Protection Bureau as the share of mortgages serviced by nonbanks has nearly quadrupled since 2012, according to a report released by the GAO on Monday. Nonbank servicers are now servicing almost a quarter of the nation’s outstanding residential mortgage loans as of June 2015, having increased from 6 point 8 percent in 2012.
The GAO recommended in its report that Congress should consider granting FHFA the authority to examine third parties that do business with Fannie Mae and Freddie Mac in order to identify risks that could affect the GSEs. The GAO also recommended that the CFPB should take steps to collect more data on the identity and number of nonbank servicers, since the Bureau currently does not have a mechanism to develop a comprehensive list of nonbank servicers.
The trial in the case of PHH Corp. versus CFPB begins Tuesday morning in the U.S. Appeals Court for the District of Columbia. PHH is trying to overturn a 109 million dollar penalty issued by the CFPB in June 2015 over alleged violations of the Real Estate Settlement Procedures Act. The New Jersey-based lender claims in its suit that the CFPB abused its power. This is a landmark case because it is the first time in the almost five-year history of the CFPB that a company has judicially challenged a penalty handed down by the Bureau.