The Consumer Financial Protection Bureau has published the ninth edition of its Supervisory Highlights, a report that details supervisory actions taken by the bureau. The current report covers the period from May 2015 through August 2015.The CFPB said that during this period, it has found violations in the student loan servicing, mortgage origination and servicing, consumer reporting, debt collection markets, and fair lending, leading to CFPB supervisory actions that resulted in $107 million in relief to more than 238,000 consumers. Other actions have included, among other things, correction of information submitted to consumer reporting agencies, creation and implementation of new policies and procedures, and the cessation of deceptive practices.
Consumer reporting. CFPB examiners conducted one or more reviews of compliance with furnisher obligations under the Fair Credit Reporting Act and Regulation V at depository institutions. The reviews focused on furnishing activities to consumer reporting agencies that specialize in reporting on consumers’ deposit account information. Examiners found that one or more entities failed to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information furnished to CRAs, as required by Regulation V. Examiners found that while one or more entities had policies and procedures addressing accuracy and integrity with respect to their furnishing of information to CRAs on credit accounts, they failed to have policies and procedures addressing accuracy and integrity with respect to their furnishing information on deposit accounts as required by Regulation V. Examiners also found other violations of the FCRA as described in the report.
Debt collection. The Fair Debt Collection Practices Act requires debt collectors to make certain disclosures in their first communication with a consumer. In subsequent communications, among other things, they must state that the communication is from a debt collector. According to the CFPB’s report, during the examination of one or more debt collectors, examiners determined that the collectors’ employees did not always state during subsequent phone calls that the calls were from debt collectors. The bureau’s Office of Supervision directed the debt collectors to improve training with regard to the FDCPA’s requirement to provide these disclosures.
In addition, during examinations, the CFPB found that debt collectors had inadequate systems in place to comply with FDCPA requirements that debt collectors limit their communications with consumers in certain ways, e.g., the law generally prohibits a debt collector from contacting a consumer the debt collector knows is represented by an attorney and prohibits a debt collector from contacting a consumer at his or her place of employment if the debt collector “knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.”
Further, examiners found that one or more servicers violated the FDCPA when they sent debt validation letters listing debt amounts that the servicer could not verify as accurate and when they failed to send debt validation letters to borrowers within five days after the initial communication about the debt, where the borrowers’ loans were in default when servicing rights were obtained.
Mortgage origination. In mortgage origination examinations, CFPB examiners found violations of disclosure requirements pursuant to the Real Estate Settlement Procedures Act and Regulation X; the Truth in Lending Act and Regulation Z; and consumer financial privacy rules, implemented by Regulation P. The report details the specific findings of the examiners as to the violations, including:
- failure to comply with the requirement that settlement charges not exceed amounts on the good faith estimate by more than specified tolerances;
- non-compliance with requirements for completion of HUD-1 settlement statements;
- failure to comply with the requirement to provide the homeownership counseling disclosure and an accurate loan servicing disclosure statement; and
- non-compliance with consumer financial privacy requirements.
Mortgage servicing. The CFPB reports that one or more mortgage servicers “have made significant improvements in the last several years.” Further, one or more servicers conducted formal reviews of information technology structures and identified the inadequacies causing earlier problems, including system outages. The bureau continues to see that the inadequacies of outdated or deficient systems pose considerable compliance risk for mortgage servicers, and that improvements and investments in these systems can be essential to achieving an adequate compliance position.
However, CFPB examiners found that one or more servicers violated Regulation X because their policies and procedures were not reasonably designed to achieve certain objectives. Examiners directed servicers to implement policies, procedures, and requirements compliant with Regulation X.
Student loan servicing. The report indicates that the CFPB continues to examine federal and private student loan servicing activities, mainly to determine whether entities have engaged in unfair, deceptive, or abusive acts or practices. The bureau also reviews student loan servicers’ practices related to furnishing of consumer information to CRAs for compliance with the FCRA and Regulation V. In the CFPB’s student loan servicing examinations, examiners have identified several unfair or deceptive acts or practices, as well as FCRA and Regulation V violations.
Supervision program developments. The report also lists new developments within the supervision program, including: new auto finance examination procedures; updated mortgage origination exam procedures; and fair lending potential action and request for response.
Appeals process. The CFPB has revised its appeals process as of Nov, 3, 2015. The revised process implements changes to the CFPB’s Supervisory appeal process as originally published in CFPB Bulletin 2012-07. The amended process:
- allows members of the Supervision, Enforcement, and Fair Lending Associate Director’s staff to participate on the appeal committee, replacing the existing requirement that an Assistant Director serve on the committee;
- permits an odd number of appeal committee members in order to facilitate resolution of appeals;
- limits oral presentations to issues raised in the written appeal;
- provides additional information on how appeals will be decided;
- prevents an institution from appealing adverse findings or an unsatisfactory rating related to a recommended or pending investigation or public enforcement action until the enforcement investigation or action has been resolved; and
- changes the expected time to issue a written decision on appeals from 45 to 60 days.
The revised policy will apply to appeals of any report of exam emailed on or after Sept. 21, 2015.
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