Fitch: CFPB regulations likely to target mortgage servicers

Mortgage lenders and service providers are likely to be subjected to greater regulatory and compliance standards in coming months, as new rules from the Consumer Financial Protection Bureau take effect, according to a report released this week by Fitch Ratings. The proposed measures include requirements for lenders to provide borrowers with enhanced transparency through simplified mortgage statements and disclosure of fees and interest rates. "We believe it is unclear what impact the agency's new rules would have on future mortgage performance as a function of a more informed borrower," Fitch reported in a statement. "For example, if mortgage holders were given notice of increased payment amounts, they could begin budgeting for the additional cost sooner or shift to alternative products." The latest round of regulation appears to be focused on enhancing processes for mortgages that have been marked by aggressive underwriting, as well as mortgage products tied to overvalued homes, Fitch added. The report highlights the importance of consumer credit risk management, particularly in regards to mortgage lending, as the housing market has been one of the slowest markets to recover from the economic downturn.