Fitch: New CFPB Rules Will Increase Compliance Costs

Clearer monthly mortgage statements, warnings before interest rates adjust, quick correction of errors ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô these are among the proposed rules for mortgage servicers from the ""Consumer Protection Financial Bureau"":http://www.consumerfinance.gov/.

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According to a commentary from Fitch Ratings, these new rules, if implemented, would set consistent standards for residential servicers, but the rules ""will also further increase compliance costs for the industry and potentially drive further consolidation within mid to smaller servicers.""

The ratings agency stated one key change with the proposed CFPB rules is that it applies to banks and nonbanks of all sizes and types, and for smaller institutions, the impact of compliance costs is believed be even greater compared to the largest banks.

""As such, Fitch believes these changes have the potential to drive further consolidation and uncertainty in the industry as larger entities scale down their presence due to increased scrutiny and compliance risks, while smaller entities exit due to higher compliance costs and insufficient returns,"" the commentary stated.