Unfair, deceptive practices in auto loan and mortgage servicing, more noted in CFPB Supervisory Highlights

Findings of unfair and deceptive or abusive acts or practices connected to auto loan servicing, deposits, mortgage servicing, and remittances are described in the winter 2019 edition of the Consumer Financial Protection Bureau (CFPB) Supervisory Highlights.

The highlights document provides a general description of findings by examiners, based on examinations generally completed between June and November 2018. Among the findings cited:

  • Auto loan servicing: Recent auto loan servicing examinations identified unfair acts or practices related to collecting incorrectly calculated deficiency balances. Recent examinations have also identified deceptive acts or practices related to representations on deficiency balance notices.
  • Bill-pay debited date: Examiners found that one or more institutions engaged in a deceptive act or practice by representing that payments made through an institution’s online bill-pay service would be debited on the date selected by the consumer or a few days after the selected date, while failing to disclose or failing to disclose adequately that, in instances where a payee accepts only a paper check, the debit may occur earlier than the selected date.
  • Mortgage payment late fees: One or more examinations observed that servicers charged consumers late fees greater than the amount permitted by mortgage notes. Examiners identified several types of affected mortgage notes, including some notes guaranteed by the Federal Housing Administration (FHA) and some West Virginia mortgage notes.
  • Private mortgage insurance (PMI) cancellation: At one or more servicers, borrowers’ requests to cancel PMI coverage were declined for the stated reason that they had not reached 80% of the original value of the property, even though they had. Although the borrowers did not satisfy other criteria necessary to trigger borrower-initiated cancellation rights (under the Homeowners Protection Act), the servicer(s) did not provide these as reasons to borrowers for denying the requests.

Other findings included servicers’ failure to meet “reasonable diligence” requirements related to loss mitigation applications; risk of deceptive act or violations related to foreclosure timeline extensions affecting home equity conversion mortgages; violations of the error resolution provisions of the remittance rule; among others.

The report also lists remedial actions (enforcements and settlements, and civil money penalties) taken previously against payday lender Cash Tyme; online lender Enova International Inc.; State Farm Bank, FSB; consumer financial services firm Santander Consumer USA, LLC; and payday lender Cash Express, LLC.

CFPB Winter 2019 Supervisory Highlights