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CFPB Finds Violations of Consumer Financial Laws Among Lenders

The Consumer Financial Protection Bureau (CFPB) released a ""_Supervisory Highlights_"":http://files.consumerfinance.gov/f/201210_cfpb_supervisory-highlights-fall-2012.pdf report Wednesday, providing an overview of its supervisory actions between July 2011 and September 2012. The agency found several instances in which financial institutions did not adhere to federal consumer financial laws.


The CFPB's supervisory reach extends over banks holding in excess of $10 billion in assets and their affiliates, nonbanks that offer mortgage-related services, private education loans, payday loans, and other ""larger participants"" and nonbanks designated by the Bureau.

With regard to mortgage providers and originators, the CFPB pointed out a few specific areas of concern, including compliance with the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), and the Home Mortgage Disclosure Act (HMDA).

""During examinations, the CFPB has noted instances of significant non-compliance with these statutes,"" the CFPB stated in its report.

With regard to RESPA, the CFPB noted instances in which institutions did not properly disclose transaction costs and did not properly complete good faith estimates and HUD-1 settlement statements.

The CFPB also noted violations of TILA, including failure to provide consumers with accurate interest rates, payment amounts and schedules, late payments, security interests, and assumption policies.

Some mortgage originators also did not comply with HMDA, which requires them to report certain information to regulators and the public. The CFPB relies on HMDA data to determine whether credit is being provided fairly.

Across all regulated entities, the CFPB found cases of ""deficient compliance management systems"" and failure to ""effectively manage service providers acting on [their] behalf.""

The CFPB has requested institutions in violation of federal consumer compliance laws take corrective action.

The agency has also required payment of $435 million to about 5.7 million consumers who were harmed by violations.

Along with the _Supervisory Highlights_ report released Wednesday, the CFPB announced a new ""appeals process"":http://files.consumerfinance.gov/f/201210_cfpb_bulletin_supervisory-appeals-process.pdf for financial institutions who do not agree with the CFPB's assessment and a new ""manual"":http://files.consumerfinance.gov/f/201210_cfpb_supervision-and-examination-manual-v2.pdf for the examiners acting on behalf of the agency.


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