CFPB report IDs illegal practices uncovered by examiners

June 24, 2015

WASHINGTON (6/24/15)--Consumer Financial Protection Bureau (CFPB) examiners found five illegal practices at its regulated institutions during the first four months of 2015. Its supervisory resolutions resulted in the remediation of $11.6 million to more than 80,000 consumers, the bureau reported in its eighth edition of Supervisory Highlights, released Tuesday.

“We are extremely concerned that one year after the CFPB’s mortgage servicing rules went into effect we are still finding runarounds and illegal dual-tracking,” said CFPB Director Richard Corday, noting that the bureau’s “rules require that servicers give borrowers a fair process when they try to save their homes.” The agency also found quality control issues problems at consumer reporting agencies.

Among the findings:

  • Illegal dual-tracking of foreclosures and loss mitigation applications.At least one servicer sent notices of intent to foreclose to borrowers already approved for trial modifications, which could mislead borrowers to thing their servicer had abandoned the trial modification. Also, because of a system error, at least one servicer sent notices to borrowers who were current on their loans saying that foreclosure would be imminent;
  • Illegal runarounds with loss mitigation applications. Mortgage servicers failed to follow certain procedures in handling a homeowner’s loss mitigation application. Procedures require that five days after receiving an application, servicers notify the homeowner that it received the application, state whether it was complete, and if not, identify what is missing. At least one servicer requested additional documents that were either not applicable to the consumers’ circumstances or had already been submitted. Other servicers failed to send the required notices five days after receiving the applications. The breakdowns caused delays in converting trial modifications to permanent modifications;
  • Debt collection complaints disregarded.At least one debt collector did not record, categorize, or process complaints and inquiries. At other collectors, complaints and inquiries remained in an electronic queue that never was reviewed or resolved. Debt collectors also failed to investigate disputes. Consumers’ problems go unanswered and the lack of record-keeping deprives compliance personnel of an important tool for detecting and fixing violations of federal consumer financial laws;
  • Accuracy problems at consumer reporting agencies. One or more credit reporting agencies continued to have problems related to information collection and quality control. At least one agency failed to regularly monitor its furnishers to ensure they followed requirements. No quality controls were in place to test existing consumer reports for accuracy. CFPB supervision directed these credit reporting agencies to develop a plan to implement such quality controls; and
  • Fair lending violations. One or more institutions denied or discouraged mortgage applications from consumers who would have relied on public assistance income to repay the loan. Excluding or refusing to consider public assistance income violates the Equal Credit Opportunity Act. CFPB’s examiners directed them to change their policies and identify and provide remediation to harmed applicants.