On November 3, the Consumer Financial Protection Bureau (CFPB) released its fall 2015 supervisory report concerning enforcement actions from May 2015 through August 2015. The Bureau highlights violations in the mortgage lending and servicing, student loan servicing, consumer reporting, and debt collection segments.
The 45-page report indicates that the CFPB collected $107 million in relief to more than 238,000 consumers. “Borrowers should not be mistreated when trying to repay their loans. We will continue to shine light on the problems we observe in areas such as servicing, consumer reporting, and debt collection, and hold companies accountable when they do not treat borrowers fairly,” CFPB Director Richard Corday explained.
The CFPB has enforcement authority over various consumer statutes such as the Fair Debt Collections Practices Act, the Fair Credit Report Act, and the Real Estate Settlement Procedures Act. During its examinations of regulated entities such as lenders, banks and credit unions with more than $10 billion in assets, and specialty lenders, the CFPB has found problems and chosen to use its “supervisory” authority to initiate nonpublic actions resulting in restitution to consumers.
Specifically, the CFPB reports that some student loan services allocated payments to maximize fees and failed to provide consumers choices about applying payments. In the mortgage lending area, the CFPB notes that mortgage servicers failed to terminate eligible borrowers’ mortgage insurance and reimburse consumers. Further, examiners determined that at least one debt collector failed to identify as a debt collector during collections calls with consumers.
In the report, the CFPB also observed positive steps taken by regulated entities to improve compliance. For example, the Bureau notes that mortgage servicers have improved compliance auditing systems and technology reviews, and that lenders have informed consumers that lump sum payments may not pay off loans despite consumers’ wishes to do so.
Finally, and perhaps most importantly, the CFPB announced that it has revised its examination appeals process. The revised policy allows members of the CFPB’s Supervision, Enforcement, and Fair Lending team to participate on the appeal committee, provides that an odd number of appeal committee members sit on the committee to promote resolution, includes the standard of proof that the committee will use to rule on the appeal, and revises the written decision time from 45 to 60 days. Regulated entities are encouraged to review the full report to understand the CFPB areas of focus for supervisory activities and understand changes to the appeal process.