CFPB Issues Summer 2021 Supervisory Highlights | Weiner Brodsky Kider PC

The CFPB has published its 24th Supervisory Highlights, exchanging observations and results from audits in the areas of auto service, consumer reporting, collections, deposits, fair lending, mortgage lending, mortgage servicing, private educational lending, payday loans and student loan sharing maintenance.

The CFPB publishes regulatory highlights “to help institutions and the general public better understand how the Bureau Institute audits compliance with federal consumer finance law”. The 2021 Summer Report contains highlights from exams that were completed from January 1, 2020 to December 31, 2020, but excludes pandemic-related highlights that the CFPB covered in its 23rd edition. The key findings of the 2021 Summer Report include:

• Fair lending. In the area of ​​fair lending, CFPB auditors found violations of the Home Mortgage Disclosure Act (HMDA) and the Equal Credit Opportunity Act (ECOA). Investigations during the covered period revealed inaccurate HMDA data submitted by financial institutions, including “common” errors in the fields newly added to the HMDA loan application register from 2018. The CFPB found that there were more errors in the HMDA fields than were added in 2018 compared to other HMDA areas that the CFPB attributed to poorly compliant management systems and poor data mapping.

  The report also highlighted an alleged violation of ECOA redlining for a practice that “would have discouraged reasonable people in minority neighborhoods in Metropolitan Statistical Areas (MSAs) from applying for credit”. Among other practices, the CFPB found it relevant that the lender ran a series of direct mail marketing campaigns that “featured models who all appeared to be non-Hispanic white.” In addition, its “mortgage professionals” marketing materials showed “only professionals who appeared to be non-Hispanic white,” and the lender’s office locations were almost all concentrated in most of the non-Hispanic white areas.

• Mortgage lending. The CFPB identified several alleged violations of Regulation Z and the CFPA’s prohibition of unfair or misleading practices related to mortgage lending practices by lenders. Among other things, the CFPB’s auditors found that certain lenders compensated lenders on the basis of product type, in violation of the prohibition on compensation under Regulation Z, which is based on the “Terms and Conditions”. In particular, the CFPB found differences in the compensation base depending on whether the loan was a home loan or a bond loan subject to Housing Finance Agency regulations.

• Mortgage service. The CPFB noted that its regulatory reviews continue to focus on the loss mitigation process. The CFPB found that certain service providers had breached Regulation X by failing to provide timely loss mitigation notices, and noted that the “breaches were caused in part by service providers’ efforts to unexpectedly increase claims due to natural disasters cope, and both borrowers were hit by a disaster ”. Areas and those outside of disaster areas. ”The report said that utilities subsequently developed plans to improve staffing capacity in response to future disasters that increase harm reduction applications. The CFPB also referred service providers to their previous 2018 statement on prudential practices regarding financial institutions and consumers affected by a major disaster or emergency.

• Consumer reports. In the area of ​​consumer reporting, the report focused on companies using consumer credit reporting companies (CRC), which are subject to the Fair Credit Reporting Act (FCRA) and its implementing regulation, Regulation V. The CFPB found that CRCs were deficient in several areas of FCRA compliance, including: (i) accuracy requirements, (ii) safety stop requirements that apply to statewide CRCs as defined in FCRA, and (iii) requirements related to blocking requests of identity theft.

• Collection of debts. The CFPB oversees certain companies that engage in debt collection activities, including those companies that are major participants in the consumer collections market and non-banks that are service providers. The summer 2021 report found that certain major participants in debt collection agencies violated the Fair Debt Collection Practices Act (FDCPA) by, among other things, communicating with consumers at their workplaces after they knew or should have known that the consumer’s employers this prohibit communications. The CFPB auditors also found that certain debt collection agencies had inadequate compliance controls when communicating with third parties to find suspected debtors. In response to most collection violations, the CFPB found that companies improved training and monitoring or improved aspects of their compliant management system.

• insoles. The report of summer 2021 highlighted numerous violations in the field of deposits, including non-compliance with Regulation E (Implementation of the Electronic Money Transfer Act), Regulation DD (Implementation of the Truth in Savings Act) and the CFPA prohibition of unfair or unfair fraudulent acts or practices. The CFPB emphasized that it continued to identify violations related to electronic money transfer services, such as: For example, consumers were asked to contact merchants about alleged unauthorized transactions before they were investigated themselves, and found that previous regulatory highlights highlighted similar violations. The summer 2021 report also identified examples of financial institutions failing to provide temporary loans in a timely manner to consumers who reported an account error.

• Car maintenance. The CFPB continues to focus on auto loan processing to assess whether companies have committed unfair, fraudulent, or abusive acts or practices prohibited by the Consumer Financial Protection Act (CFPA). The auditors identified unfair or fraudulent practices related to the placement and removal of collateral insurance, including unnecessary collateral insurance fees, when actual insurance coverage was not provided for the periods calculated.

As in previous editions, the 2021 Summer Report includes information on recent public enforcement actions, at least in part due to the oversight activities of the CFPB. The CFPB highlighted four consent orders or settlements related to consumer overdraft fees, collateral insurance, and remittance services.

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