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Friday, October 31, 2014

This Week at the CFPB

A summary of this week's news about the CFPB from the ABIA and ABA Dodd-Frank Tracker:
The ABIA has a Task Force of members that work on issues related to the CFPB's regulation of insurance products. If you are an ABIA member and would like to learn more about ABIA's work with CFPB to educate them about the bank-insurance industry or join our CFPB Task Force, please contact us and visit our website.

Thursday, October 30, 2014

CFPB: UDAAP in Student Loan & Mortgage Servicing

By ABIA Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC

The CFPB found that student loan servicers and mortgage services engaged in unfair and deceptive acts when they, for example, charged illegal late fees and deceived consumers about loan modifications.
The CFPB released its sixth edition of Supervisory Highlights, which covers supervisory activities between March and June 2014. The report highlights problems in two specific markets: student loan servicing and mortgage servicing.
Student Loan Servicing.
While supervising for compliance with federal consumer financial laws, Bureau examiners found that one or more student loan servicers were:
  • Allocating payments to maximize the number of loan delinquencies and late fees;
  • Misrepresenting and inflating minimum payments;
  • Charging illegal late fees during the loan grace period;
  • Failing to provide accurate tax information;
  • Misleading consumers about bankruptcy protections; and
  • Making debt collection calls to consumers at inconvenient times.
Mortgage Servicing.
While supervising for compliance with federal law, Bureau examiners found that some servicers:
  • Failed to oversee service providers;
  • Unfairly delayed permanent loan modifications; and
  • Deceived consumers about status of permanent loan modifications.

ABIA Hosts Compliance Webinar on Service Provider Oversight

Yesterday, the American Bankers Insurance Association hosted a Compliance Webinar on Service Provider Oversight.  Chrys D. Lemon, McIntyre & Lemon, PLLC discussed the risk management of service providers. The webinar gave an overview of the OCC’s and the CFPB’s expectations and provided participants with guidance on how to reduce third-party compliance risks.

View the presentation and download the recording.

Tuesday, October 28, 2014

CFPB Issues Lists of Rural, Undeserved Counties for 2015

The Consumer Financial Protection Bureau yesterday released lists of rural or underserved counties to use in 2015 in conjunction with the bureau’s Ability-to-Repay, escrow, HOEPA and appraisal rules.
Rural counties and county-level jurisdictions were generally defined by using a U.S. Department of Agriculture classification system and underserved counties were defined by data collected under the Home Mortgage Disclosure Act, the CFPB said.

Friday, October 24, 2014

Mortgage Servicer Under Fire for Backdated Letters

By ABIA Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC

New York’s top financial regulator, Benjamin Lawsky, is investigating a mortgage servicer for backdating thousands of letters to borrowers.

The Wall Street Journal reports: “In a toughly worded letter sent to [a mortgage servicer] on Tuesday, . . . [Mr.] Lawsky said that even after an employee at the firm discovered and reported instances of backdating, [the mortgage servicer] ignored them for months and still hasn’t corrected them, nearly a year after they were initially found. . . . ‘[The mortgage servicer's] indifference to such a serious matter demonstrates a troubling corporate culture that disregards the needs of struggling borrowers,’ Mr. Lawsky wrote.

“The . . . letters had been sent to borrowers who were behind on payments or in need of loan modifications providing easier terms, Mr. Lawsky said. Many went to borrowers who had been denied loan modifications, informing them they had 30 days to appeal the decision. But the deadline had passed by the time the backdated letters arrived.”

“[A] person close to the matter said the regulator was likely to demand a settlement or consent order that would require that [the mortgage servicer] find borrowers who had received backdated letters and give them an extended opportunity to correct loan delinquencies or other problems.”