The new rules could make mortgage servicing more expensive, especially for those specialty servicers and level the playing field between them and the big bank servicers. That is because many of the new rules are similar to rules the big banks are already following under the $25 billion servicing settlement signed early last year with state attorneys general and the Department of Justice over “robo-signing” foreclosure abuses. The specialty servicers have no such mandates.

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“If you’re a good servicer who’s been doing sensible things, this will probably be about what you are doing now, just with a heavier enforcement regime behind it,” said CFPB Director Richard Cordray. “For servicers that have been doing a poor job, and many of them have, they will have to change their processes and get in line.”

The new rules include some very basic service standards, like clear monthly statements, prompt payment crediting and quick correction of errors; In other words, common sense that one might not expect to see mandated by a federal regulator.

“This shows just how poorly performing the mortgage servicing industry was before the crisis, and then as volumes increased in delinquencies during the crisis, it all exponentially worsened,” said Cordray.

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Most of the rules focus on those delinquencies. First, and perhaps foremost, servicers may not move forward with a foreclosure while simultaneously working with a borrower to avoid foreclosure. This “dual tracking” led to thousands of borrowers losing their homes when alternatives were well within reach.

Article source: http://www.cnbc.com/id/100385527