Monday, November 3, 2014

FYI: CFPB Issues "Supervisory Highlights" (6th ed.) Noting Various Deficiencies In Mortgage Servicing, Debt Collection, Student Lending, Deposits, and Other Areas

The CFPB issued its sixth edition of its “Supervisory Highlights,” summarizing various observations from its examination process, including in the areas of consumer reporting, debt collection, deposits, mortgage servicing, and student loan servicing.


A copy of the Fall 2014 CFPB Supervisory Highlights is available at:


As to mortgage servicing and debt collection in particular, the CFPB noted issues as to the following areas:


Mortgage Servicing:


  Third Party and Vendor Management  (absence of policies and procedures, omission of some vendors required under Regulation X, absence of periodic review requirements, absence of specificity as to sharing of loss mitigation information)

  Loan modifications (failures to timely convert trial mod into permanent mod while interest accrued and reported payments as late, terms of mod docs not matching terms approved by underwriting followed by corrected mod docs, steering borrower away from HAMP to proprietary mods)

  Short sales (waivers of deficiency not confirmed in short sale agreements)


Debt Collection:


  Unlawful imposition of convenience fees not allowed under state law, or not provided by agreement 

  False threats of litigation 

  Faulty training materials causing prohibited disclosures to third parties (faulty training materials directed employees to disclose their name and collector’s name parties before identifying the party with whom they were speaking, and without being expressly requested to do so)

  Unfair practices with respect to debt sales (sellers overstating APRs in documents provided to debt buyers, significant delays by seller in transferring post-sale payments to debt buyers)



As to deposits and student loan servicing, the CFPB noted issues as to the following areas:


Student Loan Servicing:


  Allocating partial payments in a way that maximizes late fees 

  Misrepresentations about required minimum payments on billing statements

  Charging improper late fees

  “Out of Time” telephone communications




  Violations of Regulation E error resolution requirements (including as to Notices)

  Violations regarding Regulation E liability for unauthorized transfers





Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
(312) 551-9320
(312) 284-4751
(312) 493-0874


Admitted to practice law in Illinois



          McGinnis Wutscher Beiramee LLP





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