On November 16, 2022, the CFPB released a new Supervisory Highlights report on legal violations identified during the CFPB’s supervisory examinations in the first half of 2022. The report details key findings across consumer financial products and services, including how consumer reporting companies and data furnishers continued to violate the Fair Credit Reporting Act (FCRA) by failing to promptly address and update incorrect information on credit reports. The CFPB’s 28th edition of Supervisory Highlights also underscores instances where mortgage servicers charged impermissible fees when homeowners went to make their mortgage payments.
The examiners from the CFPB found legal violations across consumer financial products and services during January 1, 2022 to June 31, 2022 period, including the following:
Inaccurate information in credit reporting.
Examiners found that one or more of the nationwide consumer reporting companies failed to report to the CFPB the outcome of their reviews of complaints about inaccuracies on consumers’ credit reports. In addition, there were violations of the accuracy obligations of the FCRA by furnishers, such as auto loan furnishers reporting inaccurate information about consumer loans despite knowing that the information was inaccurate.
In response to these findings, the consumer reporting companies revised their policies, procedures, and practices to be more transparent in handling such complaints, while furnishers corrected the inaccurate information for affected consumers.
Illegal “pay-to-pay” fees in mortgage servicing.
The CFPB examiners found that mortgage servicers charged sizable phone payment fees where consumers were not made aware of these pay-by-phone penalties.
The CFPB required the servicers to reimburse all borrowers who paid phone payment fees when those fees were not properly disclosed.
Unfair and deceptive practices in auto loans.
Examiners also identified legal violations related to add-on product charges, loan modifications, double billing, electronic devices that interfere with driving, and debt collection tactics.
In the instances where borrowers paid off their loans early, but servicers engaged in an unfair practice by failing to provide refunds for unearned fees related to the add-on products, the Bureau required the servicers to refund the affected customers.
Mishandling of COVID-19 relief.
CFPB examiners also conducted assessments to evaluate how financial institutions handled pandemic relief benefits deposited into consumer accounts. They found that some policies and procedures may have resulted in people losing their pandemic relief benefits due to garnishments or setoff practices. In response to these findings, the CFPB directed the institutions to issue refunds and change their processes to ensure they comply with rules regarding garnishments and setoff practices.
Certain CFPB examinations also focused on mortgage servicers’ actions as homeowners experienced financial distress related to the COVID-19 pandemic and found violations such as
Failure to timely provide homeowners with CARES Act forbearances;
Servicers unfairly charged some individuals fees, while they were in CARES Act forbearances; and
Failure to maintain policies and procedures reasonably designed to properly evaluate homeowners’ loss mitigation options when CARES Act forbearances expired.
Read the CFPB’s press release here
The Supervisory Highlights can be found here.