On September 29, 2014, the CFPB ordered Flagstar Bank to pay $37.5 million in fines due to what it found to be violations of mortgage servicing rules. These fines include restitution of $27.5 million to approximately 6,500 borrowers who were serviced by Flagstar – 2,000 of whom lost their homes to foreclosure and a $10 million civil penalty to the CFPB Civil Penalty Fund.
Regulation. The word seems in and of itself antithetical to the American spirit of free enterprise, entrepreneurship, and business progress. But any discussion of today’s mortgage industry must start with the changes wrought by the tide of regulation sweeping the marketplace. The White House, Department of Justice, the OCC and the Consumer Financial Protection Bureau (CFPB) are all striving to protect consumers and bring “transparency” to the mortgage process – from origination all the way to loss mit and foreclosure. So what exactly do all the regulations mean?
The traditional “buy/build/repeat” software and bodies approach to addressing many of the issues facing today’s mortgage industry will not work. It’s simply not scalable. More so than ever before, execution is now critical. It’s time to think outside the box, look at new ways of doing business, take calculated risks, and evaluate solutions with an open mindedness not constrained by cost alone.