CFPB Releases Supervisory Highlights Report

The CFPB recently released its latest Supervisory Highlights, Issue 18: Winter 2019 addressing issues uncovered from supervisory examinations generally completed between June and November 2018.  The report shares recent supervisory observations in the areas of: automobile loan servicing, mortgage servicing, deposits, and remittances.  As in past editions, the report includes information about recent public enforcement actions that were a result, at least in part, of the CFPB’s supervisory work.  The report also includes information about recently-released supervision program developments.

The CFPB’s report identifies the following examination findings:

• Automobile loan servicing: In recent auto loan servicing examinations, examiners identified unfair and deceptive acts or practices relating to collecting incorrectly calculated deficiency balances and representations made on deficiency balance notices.  More specifically, some servicers incorrectly used the wrong mileage to calculate the rebate for extended-warranty cancellations and did not request rebates for eligible ancillary products after a repossession or a total loss.  Additionally, examiners discovered that servicers mislead borrowers by creating the impression that a deficiency balance reflected a setoff of eligible rebates for ancillary products, when in fact, the servicer had not sought one or more eligible rebates. 

• Mortgage servicing: Examiners found that certain borrowers were charged late fees greater than allowed by their mortgage notes.  The report also noted that, in some instances, private mortgage insurance cancellation denial reasons were misrepresented to borrowers.  Moreover, in examinations covering 2016 activities, servicers did not exercise reasonable diligence in obtaining information and documents necessary to complete loss mitigation applications.  Further, in connection with reverse mortgage loans, examiners found that some successors-in-interest did not receive a complete list of documentation required to evaluate them for an extension of time to delay or avoid foreclosure.   

• Deposits: The report noted that certain financial institutions engaged in deceptive acts or practices by failing to notify consumers that made bill payments online that their payments may be debited sooner than the date selected by the consumer, causing some consumers to incur overdraft fees.

• Remittances:  Examiners discovered that some financial institutions violated the error resolution provisions of the Remittance Rule by failing to refund fees and, as allowed by law, taxes to consumers when remitted funds were made available to designated recipients later than the date of availability stated in the remittance disclosures and the delay was not due to one of the four exceptions specified in the Rule.

The report also discussed recent supervision program developments, including: (1) CFPB Bulletin 2018-01, which addressed changes to how the CFPB articulates supervisory expectations to institutions in connection with supervisory events; (2) the CFPB’s statement on supervisory practices regarding financial institutions and consumers affected by a major disaster or emergency; (3) the interagency statement on the role of supervisory guidance; and (4) the updates to the HMDA Small Entity Compliance Guide.