The Consumer Financial Protection Bureau, recently renamed the Bureau of Consumer Financial Protection by new Acting Director Mick Mulvaney, just released their Summer 2018 edition of Supervisory Highlights. The report summarizes their previous year's investigative activity of financial companies in the auto loan servicing, credit card, debt collection, mortgage servicing, payday lending, and small business lending industries.
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The compliance efforts of the mortgage servicers is shown to be woefully inadequate. In particular, focusing just on the difficult situation of homeowner's facing foreclosure, the report outlines four very troubling areas, where their examinations identified unfair acts or practices where "consumers experienc[ed], substantial injury that could not be reasonably avoided. A summary of the findings:
- After successfully making trial payments, borrowers were not placed into a permanent mod in a timely manner. The borrowers continued to accrue fees and interest at the previous rate, and were continued to be reported to credit agencies as delinquent. The servicers did not remediate their errors when notified, and were found not to have procedures or policies for remediation. The servicers blamed the problems on insufficient staffing.
- Borrowers were charged more than what they agreed to on their loan mod agreement, resulting in either higher payments or for a longer term than agreed upon. The servicers blamed the problems on their payment calculation software.
- Borrowers were told that if they accepted a loss mitigation offer by phone or in writing by a specific date that foreclosure would not be initiated. However, that wasn't true and foreclosure was still initiated, leading to a loss of the borrower's home.
- Borrowers who submitted complete loss mitigation applications less than 37 days from the foreclosure were sent notices saying the applications were complete and that the decision would be received within 30 days. But after sending the notices the foreclosure sales were conducted without a decision on the application being made.
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These are very serious findings, affecting some of the most vulnerable parts of our population. When you are in financial trouble, and you rely on your lender's promises and/or agreements, there should be an expectation that things will be handled professionally and competently. Overcharging a distressed homeowner or even worse, foreclosing on their home in violation of an agreement, is unacceptable.
Prior to Acting Director Mick Mulvaney taking charge, these annual bulletins would also tout the amount of restitution payments, or the amounts of consumer remediations, or the amount of fines levied. Those have conspicuously been removed, as the new policy of the CFPB is to support industry, and not protect consumers.