CFPB publishes summer 2021 supervision highlights | Weiner Brodsky Kider PC
The CFPB has issued its Highlights of the 24th Supervision, sharing observations and findings from reviews in the areas of automotive maintenance, consumer reporting, debt collection, deposits, fair lending, mortgage origination, mortgage servicing, mortgage, private education loan origination, payday loans and student loan services.
CFPB publishes surveillance highlights “to help institutions and the general public better understand how the Bureau reviews institutions for compliance with federal consumer finance law.” The summer 2021 report includes highlights from reviews completed from January 1, 2020 to December 31, 2020, but excludes highlights related to the pandemic, which the CFPB covered in its 23rd issue. Key findings from the summer 2021 report include:
- Fair loan. In the area of fair loans, CFPB examiners found violations of the Home Mortgage Disclosure Act (HMDA) and the Equal Credit Opportunity Act (ECOA). Reviews during the reporting period identified inaccurate HMDA data submitted by financial institutions, including “widespread” errors in fields newly added to the HMDA loan application register from 2018. The CFPB found that There were more errors for the HMDA fields that were added in 2018 compared to other HMDA fields, which the CFPB blamed on deficient compliant management systems and poor data mapping.
The report also highlighted an alleged violation of the ECOA red line for a practice that “would have discouraged reasonable people in minority neighborhoods in Metropolitan Statistical Areas (MSA) from applying for credit.” Among other practices, the CFPB found it relevant that the lender ran a number of direct mail marketing campaigns “which featured models, all of whom appeared to be non-Hispanic white.” Additionally, marketing materials from its “mortgage professionals” showed “only professionals who appeared to be non-Hispanic whites” and the lender’s offices were almost all concentrated in predominantly white, non-Hispanic areas.
- Mortgage arrangement. The CFPB has identified several alleged violations of Regulation Z and the CFPA’s ban on unfair or deceptive practices related to lenders’ mortgage origination practices. Among other things, CFPB examiners found that some lenders compensate loan originators based on product type, which violates Regulation Z’s ban on “terms of transaction” based compensation. More specifically, the CFPB identified differences in the remuneration base depending on whether it was a construction loan or a bond loan subject to the regulations of the Housing Finance Agency.
- Mortgage services. The CPFB noted that its supervisory reviews continue to focus on the loss mitigation process. The CFPB found that some service providers violated Regulation X by failing to provide timely loss mitigation notices, noting that “the violations were caused, in part, by service providers’ efforts to handle an unexpected increase in demands due to natural disasters and have had an impact on both disaster borrowers. disaster areas and those located outside disaster areas. The report says repairers subsequently developed plans to improve staffing capacity in response to future disasters that increase loss mitigation applications. The CFPB also referred the duty officers to its previous 2018 statement on Supervisory practices for financial institutions and consumers affected by a major disaster or emergency.
- Consumer Reports. In the area of consumer reporting, the report focused on entities that use consumer reporting companies (CRCs) that are subject to the Fair Credit Reporting Act (FCRA) and its regulations, Regulation V. The CFPB found that CRCs were deficient in several areas of FCRA Compliance, including: (i) accuracy requirements, (ii) security freeze requirements applicable to CRCs at scale as defined in the FCRA, and (iii) the requirements for impersonation blocking requests.
- Debt recovery. The CFPB supervises certain entities engaged in debt collection activities, including entities which are larger players in the consumer debt collection market and non-banks which are service providers. The summer 2021 report found that some larger participating debt collectors have engaged in violations of the Fair Debt Collection Practices Act (FDCPA), including contacting consumers in their workplaces after knowing or allegedly must have known that employers of consumers prohibit such communications. CFPB examiners also found that some debt collectors had inadequate compliance controls when communicating with third parties to find suspected debtors. In response to most debt collection violations, CFPB noted that entities were improving training and monitoring, or improving some aspect of their compliant management system.
- Deposits. The summer 2021 report highlighted numerous violations in the areas of deposits, including non-compliance with Regulation E (implementation of the law on electronic funds transfers), SD regulation (implementation of the Savings Truth Act) and the prohibition of unfair or deceptive acts by the CFPA. or practical. The CFPB stressed that it continues to see violations related to electronic funds transfer services, such as forcing consumers to contact merchants about suspected unauthorized transactions before investigating themselves, noting that the highlights of previous surveillance had highlighted similar violations. The summer 2021 report also identified examples of financial institutions failing to provide interim credit on time to consumers who reported an account error.
- Automatic maintenance. The CFPB continues to focus on auto loan management activities to assess whether entities have engaged in unfair, deceptive or abusive acts or practices prohibited by the Consumer Financial Protection Act (CFPA). The examiners identified unfair or deceptive practices related to the placement and removal of warranty protection insurance, including unnecessary charges for warranty protection insurance where no actual insurance protection was provided. provided for the billed periods.
As in previous editions, the summer 2021 report includes information on recent public enforcement measures that resulted, at least in part, from CFPB’s oversight work. The CFPB has identified four consent orders or regulations related to consumer overdraft fees, collateral protection insurance and money transfer services.