WASHINGTON– The Consumer Financial Protection Bureau (CFPB) has issued its latest Supervisory Highlights report, which it said shines a light on legal violations identified by the CFPB’s examinations in the first half of 2021.
The report also highlights prior CFPB supervisory findings that led to public enforcement actions in the first half of 2021, according to the Bureau.
“Today’s report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic," said CFPB Director Rohit Chopra in a statement. "We will continue to supervise firms to halt harmful practices before they become widespread."
The CFPB said its examiners often find problems during supervisory examinations that are resolved without an enforcement action. The violations described in this report have occurred in areas such as auto loan servicing, consumer reporting, debt collection, deposits, fair lending, mortgage origination and servicing, private student loan origination, payday lending, and student loan servicing, the CFPB said.
The Findings
Among the findings:
Mortgage Servicers Charged Improper Fees to Borrowers Enrolled in CARES Act Forbearance
This past year, the CFPB said it prioritized mortgage servicing supervision due to the increase in borrowers applying for and receiving mortgage forbearance due to the COVID-19 pandemic.
“While the CARES Act prohibits mortgage servicers from imposing fees on consumers receiving CARES Act forbearance, CFPB examiners found that mortgage servicers still charged borrowers late fees and default-related fees,” the Bureau said. “These illegal fees exacerbated the economic hardships experienced by struggling homeowners in 2021. Examiners observed that mortgage servicers failed to refund some of the fees until almost a year later.”
In August 2021, the CFPB noted it published a report detailing 16 large mortgage servicers’ response to the COVID-19 pandemic. The supervisory data showed that some servicers struggled to assist distressed homeowners, the Bureau reported, adding it is actively working to support an inclusive and equitable economic recovery, which means ensuring all mortgage servicers meet their homeowner protection obligations under applicable consumer protection laws.
Recently, the CFPB issued a joint statement with the Fed, the FDIC, NCUA, the Office of the Comptroller of the Currency, and state financial regulators to clearly define their respective supervisory and enforcement authorities to protect homeowners and address any compliance failures.
Examiners Found Fair Lending Violations
The CFPB reported its examiners identified several violations of the Equal Credit Opportunity Act (ECOA) by mortgage lenders.
“The examination team found that mortgage lenders discriminated against African American and female borrowers in the granting of pricing exceptions, compared to non-Hispanic white and male borrowers,” the CFPB said. “Specifically, examiners found lenders lacked oversight and control over how mortgage loan officers granted pricing exceptions to customers. Examiners identified lenders with statistically significant disparities for incidences of pricing exceptions for African American and female applications compared to similar non-Hispanic white and male borrowers.”
The CFPB said its examiners also found that lenders improperly considered small business applicants’ religion in their credit decisions. For religious institutions applying for small business loans, some lenders improperly utilized a questionnaire that contained explicit inquiries about an applicant’s religion, the CFPB said.
Payday Lenders Improperly Debited Consumer Bank Accounts
According to theCFPB, its examiners found that lenders improperly debited or attempted to debit consumers’ bank accounts.
“In some instances where consumers called to authorize a loan payment by debit card, lenders’ systems erroneously indicated the transactions did not process, resulting in the improper debiting of additional, identical amounts or unauthorized attempts,” the Bureau said. “Consumers had no reason to anticipate debits or attempted debits and could not prevent them from occurring. These practices significantly harmed consumers by depriving them of access to their funds and creating the risk of nonsufficient fund fees or overdraft fees levied by their banks.”
The Bureau added in its statement that the violations demonstrate the ongoing risk that irresponsible payday lending practices pose to American consumers.
Remittance Providers Failed to Investigate Notice of Errors in Timely Fashion
TheCFPB reported its examiners found consumers were deprived of their rights by remittance providers who received notices of errors alleging that remitted funds had not been made available to designated recipients by disclosed dates of availability.
“Providers then failed to investigate whether deductions imposed by some foreign banks constituted a fee that the institutions were required to refund to the sender as part of the error resolution process,” the Bureau said.
Read the final report.