(July 2, 2021) Four types of violations during 2020 of federal consumer protection and anti-discrimination laws – including those involving student lending and mortgage lending disclosures — are branded “particularly concerning” in a report issued this week by the CFPB.
The bureau, in its summer 2021 Supervisory Highlights noted that the violations are generally from 2020. They reflect, the agency said, findings that arose in connection with exams of supervised entities (and resolved without specific enforcement action).
The findings, the CFPB said, are:
- Violations of mortgage servicing rules in Regulation X, including: instances of some servicers making the first notice or filing for foreclosure when it was prohibited (for example, filing before they had evaluated borrowers’ appeals; in some cases failing to notify their foreclosure counsel to stop all legal filings at the time that the servicer received a completed loss mitigation application). Examiners also found that some servicers engaged in a deceptive act or practice when they told borrowers foreclosure would not occur until a specific date but initiated foreclosures prior to that date.
- Servicers misleading consumers about the program to forgive the balance of certain federal student loans after 10 years of payments on a qualifying repayment plan if the consumer works in certain public service jobs (the Public Service Loan Forgiveness (PSLF)). CFPB said there are additional requirements consumers need to satisfy to access the program, and borrowers frequently request information from their servicers about their eligibility. Agency examiners reportedly found a number of ways that student loan servicers gave incorrect information to borrowers, resulting in missteps that could cost consumers thousands of dollars.
- Discouragement of people in minority neighborhoods from applying for credit was observed through, among other things, locating offices in almost exclusively majority-white neighborhoods, only using pictures of white people in direct mail marketing campaigns, and publishing loan officer headshots of almost exclusively white people. Examiners noted these practices lowered the number of applications from minority neighborhoods relative to other comparable lenders. (The bureau noted its lawsuit filed a year ago alleging redlining by Townstone Financial, Inc., specifically through violations of the Equal Credit Opportunity Act and Regulation B, which implements the act, and the Consumer Financial Protection Act.)
- Information accepted by consumer reporting companies from companies that furnish consumer data despite “ample signs” that these furnishers were unreliable. Examiners found that this violates the Fair Credit Reporting Act.