CFPB Supervisory Highlights – Winter 2020… and how CSG can help

In February, the CFPB released its 21st Supervisory Highlights Report. This report covered findings identified in examinations conducted by the CFPB between April 2019 and August 2019. Areas included in the report include mortgage servicing, payday lending (including general Regulation Z requirements), debt collection, and student loan servicing.

Mortgage Servicing Highlights

  • Regulation X violations discussed in the report include failing to provide required loss mitigation notices, providing incomplete notices, or not providing notices within the time required by the regulation. While the violations were, in part, caused by increased applications due to natural disasters, the CFPB still expects institutions to comply with the requirements of Regulation X.
  • The CFPB identified violations in the timing requirements for providing an acknowledgement of a loss mitigation application, as well as written notification showing what, if any, loss mitigation options are available.
CSG provides mortgage servicing reviews. During these reviews, loan files are reviewed for delinquency servicing issues; evaluation of the conduct of the loan servicing, including collection techniques, partial payments, default reporting, physical inspections and property preservation activities; loss mitigation techniques including short term forbearance; loans subject to the Service members’ Civil Relief Act; special forbearance agreements, mortgage modifications; techniques involving loans affected by the natural disasters; and loans subject to bankruptcy proceedings. Contact Us to for more information regarding this service.

Payday Lending Highlights

The violations under Regulation Z, Regulation B, and unfair acts or practices detailed below apply to more areas than payday lending.

  • Some payday lenders failed to apply payments to borrowers’ loans, thus overcharging the borrowers for unapplied payments.
  • When systems were down, some lenders required staff to calculate the annual percentage rates applicable to loans. Because of errors in calculating the term of the loans the APRs were sometimes misstated to borrowers.
  • Some lenders were not including certain fees when disclosing the finance charge on a loan.
  • In some cases, lenders were unable to prove compliance with Regulation Z because they did not retain evidence for two years. While payment histories and loan data may have been retained on computer systems, other loan origination documentation was not consistently maintained, and evidence of Truth-in-Lending compliance could not be determined.
  • When providing adverse action notices per Regulation B, some lenders did not include the specific reason(s) that the action was taken.
CSG can help you avoid all of the violations identified above. We have knowledgeable consultants and auditors trained on Regulation Z and Regulation B requirements. We also have a nationally-known expert consultant that can help determine and verify APRs. Our audit menu lists many of audits with which we can help. If you don’t see the review or service that you’re looking for, just ask! Email us at contactus@complianceservicesgroup.com or call us at 360.943.7137. We’re here to help!

 

Please be advised that CSG provides financial services compliance audit and consulting services to our clients. The services that we provide include certain tasks that may be characterized as “law-related services” under Rule 5.7 of the Rules of Professional Conduct governing lawyers. Since some of our employees are lawyers with an active bar license but are NOT engaged in the private practice of law, that Rule requires us to make disclosures clarifying that the services we perform may be law-related services, but they are not legal services.  Because they are not legal services, those services and our relationship will not be governed by the Rules of Professional Conduct that guide the client-lawyer relationship, such as rules applicable to privileged communications and prohibitions of conflicts of interest. Notwithstanding this disclaimer, we will continue to govern our relationship with you using reasonable ethical and professional standards that are expected to meet your expectations.

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