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Th e M Rep o RT | 41 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING The laTesT cFPB Official discusses new servicing rules Maggiano sheds light on the bureau's recent efforts. a recurring theme during many of the six labs at the recent Five Star Conference was compliance and how it has changed the mortgage and real estate industries in the last few years. The laws are constantly changing, however, making com- pliance an even further compli- cated issue. Laurie Maggiano, a program manager for servicing and second- ary markets at the Consumer Financial Protection Bureau (CFPB), was on hand to discuss the ever- changing world of mortgage- servicing statutes for the "CFPB's National Servicing Standards – Update Session" section of the FSC Compliance Lab on September 15. "Mortgage servicing in 2014 isn't NASCAR where you direct your staff around a predicable track repeating the same steps over and over," Maggiano said. "To a great extent, it is the Wild West with state and federal regulators changing the rules of engagement on a regular basis; state banking regulators and attorneys general citing servicers for infractions that were industry practice, albeit poor ones, 10 years ago; bank and non-bank servicers competing for product in an uneven ring; and investors so risk averse that it is surprising there are any new loans coming out of the chute. It is a demanding but also an exciting and creative time to be in this business." Maggiano presented four new rules that have either recently passed or are pending and taking comments. The first was the Interpretive Rule on Successors in Interest and ATR (ability to repay) Rule, which was published on July 8. The ATR rule is intended to stop consumers from assuming debt they cannot repay and applies to new originations and mortgage assumptions. The Interpretive Rule was added to give an exemption from the ATR rule to successors in interest who inherit a property's title but are not listed on the mortgage, such as divorced or surviving spouses. The second rule Maggiano discussed was the Publication of Consumer Complaint Narratives, which was proposed on July 17 and took comments until September 22. This rule involves publishing a database featur- ing consumers' full complaints against financial institutions. While the CFPB says such a rule will benefit consumers by providing them with necessary information and will result in more transparency among finan- cial institutions, some analysts have criticized this rule; since there is no way to verify the al- legations made in the complaints, the CFPB may in some cases be publishing unfounded grum- blings of disgruntled individuals. The third rule brought up was the Home Mortgage Disclosure Act (HMDA) Proposed Rule, which was issued on July 28 and took comments until October 22. This is a proposed amendment to the HMDA, which was amended as a result of the passage of the Dodd- Frank Reform Act in 2010. The new rule would standardize report- ing between large and small banks, and while existing data fields would be used for reporting to simplify the process, CFPB would also be expanding the reporting by adding some data fields. The Servicing Transfer Bulletin, which was published on August 19, was the fourth rule Maggiano discussed. While it is not the purpose of CFPB to inhibit transfers, she said, the purpose of this rule is to ensure that borrowers, especially those in the process of loss mitigation, are not harmed in any way by a mortgage loan transfer over which they have no control. Indeed, the summer of 2014 was a busy one for updating CFPB laws and proposing new ones, which is bound to keep servicers on their toes as far as compliance goes. "As you can see by the pace of change in just the past two, quiet, lazy months of summer, when you rightfully should expect that Washington shuts down and goes home, servic- ing policy is dynamic and fast paced," Maggiano said. their ability to avoid garnishment and loss of federal benefits." But a new report from researchers at John Burns Real Estate Consulting argues that student loans could cost the industry tens of billions of dollars this year alone. In a note to clients, researchers Rick Palacios Jr. and Ali Wolf at John Burns Real Estate estimate that 414,000 potential real estate transactions will be lost this year as the national student debt continues to balloon past the $1.1 trillion mark. Looking at Americans between the ages of 29 and 39, the researchers estimate that 29 million—more than a quarter of that population—have at least some student debt, translating into an estimated 16.8 million burdened households. Out of those households, 5.9 million pay more than $250 per month, "which inhibits at least $44,000 per year in mortgage capability for each of them," Palacios and Wolf said. Factoring in previous academic findings, the pair estimate that the resulting decline in purchasing power could mean an 8-percent drop in home sales through all of 2014, or 414,000 fewer transactions—meaning $83 billion in lost volume, assuming a typical purchase price of $200,000. What's more, the researchers say their estimate is a conservative one, as they only examined Americans under 40. Also of note is the fact that the report doesn't take into account other factors that have made the housing market less friendly to entry-level buyers, including the uneven rise in housing supply that has favored the upper price tier of the market. "While we applaud the increasing education, we need to realize that it comes with a cost known as student debt," Palacios and Wolf concluded. "We raised the red flag on student debt back in 2011 and continue to believe that this debt will delay homeownership for many, or at least require that they buy a less expensive home."