Calling the foreclosure process "fragmented," the Government Accountability Office (GAO)recommended that banking regulators and the new Consumer Financial Protection Bureau (CFPB) develop plans for regulating mortgage servicers that would include standardizing foreclosure practices.
In a 77-page report released this week, the GAO also said that while federal laws include mortgage-servicing provisions, they are largely focused on consumer protection at the time of origination, not foreclosure requirements. In light of highly publicized documentation problems that led to a widespread halt in foreclosures last fall, the GAO said that banking regulators and the CFPB — which will oversee nonbank mortgage lenders and servicers — must work together to develop uniform foreclosure standards.
The GAO undertook the study in response to the "robo-signing" scandal in which several large mortgage servicers were found to have improperly signed and notarized documents in order to speed up foreclosures. In its report, the GAO also recommended that regulators assess the risks that documentation problems pose for lenders.
