A group of analysts, academics and investors signed a letter urging regulators to create nationals standards for the mortgage servicing industry, the Wall Street Journal reported.
The group called for new standards under the Dodd-Frank law, which requires an overhaul of financial regulations. The proposed standards would apply to mortgage servicers, which collect payments and distribute them to investors. The group noted that the industry was not prepared for the deluge of foreclosures in the last few years.
The standards would help to rectify recent problems, such as homeowners’ struggles to get loan assistance and the issues in processing foreclosure paperwork. The group proposed that mortgage servicers be required to provide reasonable loan modifications to borrowers, and be held accountable for losing paperwork or not stopping a foreclosure when a borrower is receiving assistance. It also suggested requiring the companies to tell investors if they own other loans, such as second mortgages, when making payments, and basing their compensation on the long-term performance of mortgage securities.