Payday lending violations lead ‘observations’ in latest consumer bureau report

Violations of federal rules regulating payday lending, debt collection, mortgage servicing, and student loan servicing are highlighted in the latest version of “supervisory highlights” from the federal consumer financial protection agency.

Payday lending led with the most “observations,” according to the report.

In its Winter 2020 Supervisory Highlights, published Feb. 14, the Consumer Financial Protection Bureau (CFPB) noted a variety of observed violations of its rules in the four subject areas listed.

Under payday lending, CFPB noted “observations” of: failures to apply borrowers’ payments to their loans; inaccurate disclosures of annual percentage rates (APR); failures to include fees in calculation of finance charge and APR; failures to retain evidence of compliance with Regulation Z (Truth in Lending); adverse action notices which failed to disclose principal reasons for the adverse actions; and unfair impositions of unauthorized and undisclosed fees.

Under debt collection, the bureau noted among larger participant debt collectors: failure to disclose in subsequent communications that communication was from a debt collector; and failure to send notice of debt.

In mortgage servicing, the bureau cited violations of loss mitigation notice violations (through violations of Regulation X, implementing the Real Estate Settlement Procedures Act [RESPA]). Specifically, it said servicers did not provide written notice stating servicers’ determination of available loss mitigation options within 30 days of receiving the complete loss mitigation application.

On student loan servicing, the bureau said it observed inaccurate monthly payment amounts after servicing transfers.

The quarterly report also outlined recent supervisory program developments by the bureau, including:

  • Issuance of a joint federal regulator statement on the use of alternative data in credit underwriting;
  • Issuance of an interpretive rule on screening and training requirements for mortgage loan originators;
  • Announcement of dollar thresholds in Regulations Z and M for exempt consumer credit and lease transactions;
  • Release of thresholds for smaller loan exemption from appraisal requirements for higher-priced mortgage loans;
  • Final CFPB HMDA rule to provide relief to small institutions

Supervisory Highlights Issue 21, Winter 2020

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