The Consumer Financial Protection Bureau (CFPB) today released a report highlighting violations of the law identified by the Bureau’s reviews in 2020. The report also highlights previous CFPB oversight findings that led to public enforcement action in 2020, resulting in over $124 million in consumers. civil monetary remedies and penalties.
??Today’s release of Oversight Highlights reinforces the importance of the Bureau’s oversight work, including during the COVID-19 pandemic, to find and correct systemic issues that harm consumers,?? said CFPB Acting Director Dave Uejio. “The actions we took in 2020 mitigated some of this harm, but consumers are still struggling and we will remain vigilant. »
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB has the power to oversee large banks, savings banks, credit unions with assets exceeding $10 billion. dollars and certain non-banks to comply with the Federal Consumer Finance Act. Non-banks supervised by the Bureau include mortgage companies, private student lenders, and payday lenders, as well as non-banks that the Bureau defines through rulemaking as “larger participants.” other consumer financial markets as defined by the Bureau’s rules.
CFPB examiners often find problems during supervisory examinations that are resolved without enforcement action. These non-public actions have taken place in areas such as auto loan servicing, consumer reporting, debt collection, deposits, fair lending, mortgage loan origination and servicing, student loan origination private, payday loans and student loan servicing. Today’s report generally covers surveillance activities during the 2020 calendar year, and below is a summary of four particularly concerning findings from the report.
Consumer intelligence firms accepted consumer data from unreliable providers
Consumer reporting companies have an obligation to follow reasonable procedures to ensure the greatest possible accuracy of consumer information. CFPB reviewers found that consumer reporting companies accept information from companies that provide consumer data, even though there were many signs that these providers were unreliable. Reviewers have found that this violates the Fair Credit Reporting Act.
The CFPB will remain diligent and consumer intelligence firms are warned of the risks posed by accepting data from providers where there are indications of unreliability.
Reviewers found red lines
Bureau reviewers have observed the disincentive of people in minority neighborhoods from applying for credit by, among other things, locating offices in almost exclusively white majority neighborhoods, using only photos of white people in direct mail campaigns, and publishing portraits of loan officers. almost exclusively white people. Reviewers noted that these practices reduced the number of applications from minority neighborhoods compared to other comparable lenders.
As demonstrated by our complaint against Townstone Financial, Inc., the CFPB will continue to fight redlining in all its forms in the 21st century.
Reviewers found foreclosure issues
Bureau examiners found several breaches of mortgage servicing rules in Regulation X, including instances where some managers made first notice or filed foreclosure when it was prohibited. For example, some servicers filed for foreclosure before they assessed borrowers? appeals, and some repairers had not notified their foreclosure attorney to stop all legal filings by the time the repairer received a completed loss mitigation application in some cases. The reviewers also found that some repairers engaged in a deceptive act or practice when they represented to borrowers that they would not take foreclosure action until a specified date, but nevertheless initiated foreclosures. before this date.
This report highlights that consumers do not always receive the care and service we should expect before a mortgage agent forecloses on a consumer’s home. Monday, the CFPB published a final rule This will give borrowers a meaningful opportunity to research loss mitigation options, help prevent avoidable foreclosures, and help ensure a smooth and orderly transition when emergency federal foreclosure protections expire.
Student Loan Servicers Misled Consumers About Civil Service Loan Cancellation
CFPB reviewers found significant problems in the way student loan managers informed consumers about the Public Service Loan Forgiveness Program (PSLF). The PSLF is intended to cancel the balance of certain federal student loans after 10 years of payments on an eligible repayment plan if the consumer works in certain government jobs. But there are additional requirements that consumers must meet to access the program, and as a result, borrowers frequently ask their service agents about their eligibility.
CFPB examiners found a number of ways student loan servicers gave borrowers incorrect information, leading to missteps that could cost consumers thousands of dollars. For example, reviewers found that service agents misled consumers into believing they could not access PSLF if they had older loans under the federal home loan program. education (FFELP), although they could access the PSLF by consolidating the FFELP loans into direct loans.
Today’s report aims to share information that all industry players can use to ensure their operations remain compliant with the Federal Consumer Finance Act. In all cases where CFPB reviewers find issues, they alert the company of their concerns and, in many cases, outline recommended corrective actions. If necessary, the CFPB opens investigations for possible enforcement measures.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer credit markets work by making rules more efficient, applying them consistently and fairly, and giving consumers more control over their lives. economic. For more information, visit www.consumerfinance.gov.
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