CFPB Flexes Its Regulatory Muscles

Posted by Patrick Barnard on October 28, 2014 No Comments
Categories : Required Reading

16106_muscle CFPB Flexes Its Regulatory Muscles In a report that is essentially a review of recent enforcement actions, the Consumer Financial Protection Bureau (CFPB) says it recently uncovered some violations of its mortgage servicing rules at an unspecified number of servicing shops.

The bureau reports that during some recent reviews, auditors found that some mortgage servicers weren't properly overseeing the activities of their third-party vendors.

‘The bureau's servicing rules specifically require servicers to have policies and procedures to oversee servicer providers,’ the CFPB says in a release. ‘When institutions do not oversee their activities, service providers that are unfamiliar with consumer financial protection laws can harm consumers.’

The bureau alleges that some mortgage servicers had also ‘unfairly delayed permanent loan modifications,’ by failing to convert modifications that had completed a trial period to permanent modifications in a timely manner.

‘Where there were delays in this conversion, examiners found that consumers were harmed because they did not promptly receive the benefits of the terms of the permanent modification,’ the bureau says in its release.

The CFPB further alleges that some mortgage servicers had ‘deceived consumers about the status of permanent loan modifications’ simply by failing to execute them.

‘Instead, after a significant period of time, the servicers sent borrowers updated agreements with materially different terms,’ the bureau says. ‘These misrepresentations about the available terms affected the borrowers' payments, whether they would accept the modification, and how they could budget based on their expected payment.’

The report combines information about enforcement of the bureau's mortgage servicing rules with information about enforcement of its student loan servicing and debt collection rules.

The supervisory report, which reviews enforcement actions taken this fall, can be accessed here.

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