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Dual-Tracking and Loss Mitigation Runarounds Are Among Servicing Problems Found by CFPB

hands-writing1In order to provide transparency, reduce risks to consumers, and comply with federal consumer financial law, the Consumer Financial Protection Bureau (CFPB) recently shared its eighth Supervisory Highlights report. The report covers the illegal practices that the Bureau uncovers in areas such as consumer reporting, debt collection, student loan servicing, mortgage origination, mortgage servicing, and fair lending for the first four months of the year.

According to the supervisory report, the CFPB found problems with dual-tracking at mortgage servicers that could lead consumers to believe their trial modifications were canceled. They also found a lack of quality control measures in place at consumer reporting agencies. Across all industries, the CFPB supervisory resolutions resulted in the recovery of $11.6 million for over 80,000 consumers.

“We are extremely concerned that one year after the CFPB’s mortgage servicing rules went into effect we are still finding runarounds and illegal dual-tracking,” said Richard Cordray, CFPB Director. “Consumers deserve to be treated with honesty and integrity, and our rules require that servicers give borrowers a fair process when they try to save their homes. The CFPB will continue to stand beside consumers to make sure mortgage servicers are following the law.”

The CFPB has authority to supervise banks and credit unions with more than $10 billion in assets, and certain nonbanks under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the report said.

When violations of law or other significant problems or weaknesses are pointed out by the CFPB, they reveal these concerns to the institution and outline how to fix the issue. The CFPB will open an investigation for potential enforcement actions, if necessary. All entities are expected to respond to customer complaints and identify major issues and trends that may pose broader risks to their customers under the CFPB.

Supervisory Report Findings:

Illegal dual-tracking of foreclosures and loss mitigation applications: CFPB examiners reported at least one servicer that foreclosure intent notices to borrowers that were already approved for trial modifications. Dual-tracking such as this makes consumers believe that the servicer cancelled the trial modification. The Bureau also made note of at least one servicer that sent foreclosure notices to borrowers who were current on their loans.

Illegal runarounds with loss mitigation applications: When dealing with a homeowner’s loss mitigation application, the servicers must notify the homeowner upon receipt and let them know the exact status of the application, according to new CFPB rules. At least one servicer was illegally requesting additional documents from consumers that had nothing to do with the application.

Debt collection complaints disregarded: The report found that at least one debt collector did not record, categorize, or process complaints and inquires. Other collectors failed to review or resolve these complaints and inquiries. Debt collectors also failed to conduct investigations of disputes.

Accuracy problems at consumer reporting agencies: Examiners also found accuracy problems at one or more of the credit reporting agencies. These inaccuracies stemmed from issues with information collection and quality control.

Fair lending violations: One or more institutions denied or discouraged mortgage applications from consumers that would have used public assistance income to repay the loan. This violates the Equal Credit Opportunity Act.

Click here to view the complete CFPB Supervisory Highlights Report.

About Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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