CFPB Supervisory Highlights Report Tackles Inaccurate Credit Reporting and COVID-19 Relief Mishandlings

The report largely focuses on credit reporting, mortgage servicing and deceptive practices in auto loans.

11/17/2022 1:25 P.M.

3.5 minute read

The Consumer Financial Protection Bureau has released its latest supervisory highlights report on legal violations identified during the bureau’s supervisory examinations in the first half of 2022.

The findings in the report cover examinations in auto servicing, credit reporting, credit card account management, debt collection, deposits, mortgage origination, mortgage servicing and payday lending.

Key findings of the report include:

  • Credit reporting companies and data furnishers failed to promptly address and update incorrect information on credit reports, a violation of the Fair Credit Reporting Act.
  • Mortgage servicers charged impermissible fees when homeowners went to make their mortgage payments.
  • Auto loan servicers engaged in unfair and deceptive acts or practices related to add-on product charges, loan modifications, double billing, electronic devices that interfere with driving, and debt collection tactics.
  • Financial institutions’ policies and procedures may have resulted in consumers losing their COVID-19 pandemic relief benefits due to garnishments or setoff practices.

Takeaways from the report can help your agency evaluate its compliance processes. Here are a few highlights you need to know:

Credit Reporting

The CFPB conducted several examinations related to credit reporting, making the topic a significant focus in the report.

CFPB examiners found that one or more of the nationwide credit reporting agencies (CRAs) failed to report to the CFPB the outcome of their reviews of complaints about inaccuracies on consumers’ credit reports. The CRAs changed their policies, procedures, and practices to be more transparent in handling such complaints in response to the findings, the according to the supervisory highlights report.

Additionally, CFPB examiners found that furnishers had violated the FCRA’s requirements for accuracy, including that auto loan furnishers had been reporting false information on consumer loans while being aware of the falsity of the information. In response to these findings, the furnishers updated the incorrect information for the impacted customers and made it easier for them to contact the furnishers directly with complaints.

The CFPB released an advisory opinion in October discussing FCRA requirements related to procedures for ensuring the prevention of false information in credit reports, ACA International previously reported for members. Additionally, the bureau has said inaccurate medical debt information has plagued this space, and people have often been coerced to make payments on debts they do not actually owe, according to CFPB research on medical billing issues.

Mishandling of COVID-19 Relief

Further CFPB examinations found certain financial institutions’ policies and procedures may have resulted in people losing their pandemic relief benefits due to garnishments or setoff practices. The CFPB directed the institutions to issue refunds and make process changes to ensure they comply with applicable state and territorial protections regarding garnishments and setoff practices.

The CFPB also reviewed mortgage servicers’ responses to homeowners experiencing financial hardship due to the COVID-19 pandemic and found violations with the delay in giving homeowners CARES Act forbearances. It also found that servicers failed to maintain policies and procedures that were designed to accurately assess homeowners’ loss mitigation options when CARES Act forbearances expired and unfairly charged some individuals fees as a result.

The Consumer Financial Protection Act gives the CFPB the power to regulate certain nonbanks, such as mortgage firms, private student lenders and payday lenders, as well as sizable banks, thrifts and credit unions with assets over $10 billion and their affiliates.

Notably, the CFPB just finalized changes to its nonbank supervision procedural rule last week, ACA previously reported. In a press release, the CFPB stated that “the changes will provide transparency to the public about how we are using an important supervisory tool to keep pace with fast-moving consumer finance markets.”

ACA’s Take:

Accounts receivable management industry companies can use the bureau’s semiannual supervisory highlights reports to measure compliance standards with regard to the bureau’s enforcement of federal consumer financial laws and to help limit risks to consumers as well as track areas the bureau is focused on in its supervisory examinations. When it comes to finding solutions to problems or creating new regulatory measures, however; the CFPB’s actions need to be based on current data and results from working with all stakeholders.

Supervisory Highlights Fall 2022 Issue.

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