In an editorial last week in the Philadelphia Inquirer, Rohit Chopra, the CFPB’s Student Loan Ombudsman, once again made servicers of student loans the focus of his comments. In August, in remarks to the Congressional Forum on Student Loans, Mr. Chopra spoke about lessons learned from the mortgage market that might be applied to student loans. One of those lessons was the negative impact of inadequate servicing on borrowers seeking to modify or refinance their loans.
Reiterating the parallels between the mortgage and student loan markets in his editorial, Mr. Chopra wrote that “[s]tudent borrowers have reported servicing detours and dead ends that bear an uncanny resemblance to the problems homeowners have faced. And as with the mortgage market, there are reports that military families also got the runaround.” Significantly, his statement that the market is unable to address servicing problems could be a further signal that the CFPB is considering rulemaking to establish servicing standards for student loans.
In addition, Mr. Chopra’s continued focus on servicing problems reinforces concerns that CFPB civil investigative demands and enforcement activity could soon be directed at servicers of federal and private student loans and that the CFPB may attempt to assert supervisory authority over such servicers (as larger participants in the debt collection market, service providers to covered persons or entities engaged in conduct that presents risks to consumers).