Editor: David Reiss
Brooklyn Law School

April 29, 2013

The Servicing Field Is Wide Open

By David Reiss

The CFPB has proposed an additional comment to Regulation X to emphasize that that regulation does not preempt state regulation of mortgage servicing:

Proposed comment 5(c)(1)-1 would state further that nothing in RESPA or Regulation X, including the provisions in subpart C with respect to mortgage servicers or mortgage servicing, should be construed to preempt the entire field of regulation of the covered practices. The Bureau believes that this proposed addition to the commentary would clarify that RESPA and Regulation X do not effectuate field preemption of States’ regulation of mortgage servicers or mortgage servicing. The comment also makes clear that RESPA and Regulation X do not preempt State laws that give greater protection to consumers than they do. (12)

This proposed comment is pretty belts-and-suspenders given that preamble to the 2013 RESPA Servicing Final Rule said as much.  But it is still worth noting how different this approach is from the Bush years when large swaths of state consumer protection regimes were preempted by federal regulators. As the mortgage industry takes its post-Bust shape, states may begin to flex their muscles to address servicing practices that concern their residents. It will be interesting to see how this all plays out in the long game.

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