CFPB doubles down on mortgage servicing enforcement

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The brand new performing director of the Client Monetary Safety Bureau, Dave Uejio, advised workers in an e mail on Thursday that the bureau will direct its consideration to mortgage servicers, promising “aggressive motion” to make sure firms comply with the regulation.

Within the e mail, Uejio laid out his imaginative and prescient for the approaching months, saying that his high two prioities are aid for shoppers going through hardship on account of COVID-19 and the associated financial disaster and racial fairness.

“One factor we will do instantly is focus our supervision and enforcement instruments on overseeing the businesses answerable for COVID aid,” Uejio mentioned within the e mail. “I’m involved in regards to the findings described in final week’s Supervisory Highlights version that firms are failing to correctly administer aid by the disaster.”

Listed below are a few of the points the performing director highlighted on servicers:

  • Mortgage servicers gave shoppers incomplete and inaccurate details about CARES Act forbearances, did not course of forbearance requests and picked up and assessed late charges regardless of having authorized forbearances.
  • Servicers withdrew cash regardless that shoppers had been in deferment.
  • One scholar mortgage servicer denied hundreds of forbearance extensions as a result of the mortgage holder by no means responded.
  • Corporations throughout markets misreported accounts to credit score bureaus and violated CARES Act amendments that added protections to the Truthful Credit score Reporting Act.
  • Some banks set off stimulus funds and unemployment insurance coverage advantages with the intention to cowl financial institution charges and different money owed.
  • Examiners discovered that the broadly used coverage of banks solely taking PPP functions from pre-existing prospects could have a disproportionate unfavourable influence on minority-owned companies.

Uejio gave directions to expedite enforcement investigations referring to COVID-19 with the intention to ship a message to the trade at giant.

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Uejio mentioned all of this might be completed alongside reversing modifications made by the Trump administration that he says “weakened enforcement and supervision.”

“As of at this time, it’s the official coverage of the CFPB to oversee lenders with regard to the Navy Lending Act,” he wrote. “And we’re planning to rescind public statements conveying a relaxed strategy to enforcement of the legal guidelines in our care.”

Uejio additionally promised to take “daring and swift motion” to make sure racial fairness, saying the nation is having a long-overdue dialog on the topic.

“I’m going to raise and increase current investigations and exams and add new ones to make sure we have now a wholesome docket meant to handle racial fairness,” he mentioned within the e mail.

“This in fact signifies that truthful lending enforcement is a high precedence and might be emphasised accordingly. However we will even look extra broadly, past truthful lending, to determine and root out illegal conduct that disproportionately impacts communities of colour and different susceptible populations.”

This serves as a stark distinction to the therapy servicers acquired beneath the Trump administration. In October 2020 on the Mortgage Bankers Affiliation Annual conference, Federal Housing Finance Company Director Mark Calabria took the chance to acknowledge the trouble servicers had been making to assist debtors in forbearance and even thanked them. The message was clear: the mortgage trade wasn’t within the sizzling seat for this recession.

Till now.

This could possibly be step one of many because the bureau appears to extend its regulatory efforts. Beneath President Biden, the CFPB is poised to show again the clock and former CFPB Director Richard Cordray believes the subsequent 4 years might look rather a lot like his time in workplace.

Uejio will function performing director till Biden’s nominee, Federal Commerce Fee Commissioner Rohit Chopra, is confirmed by the Senate as the subsequent director of the CFPB. As soon as taking on, there’s a excessive expectation that Chopra will ramp up the bureau’s regulatory efforts, however Uejio isn’t losing any time.

“On COVID-19, we have to take swift motion now, with the intention to be certain that our actions assist folks in the course of the disaster, fairly than simply cleansing up after the very fact,” he mentioned. “As you recognize, defending economically susceptible shoppers is core to the mission of the CFPB and a key purpose why the company was created. It’s going to take pressing motion for the CFPB to step as much as this problem.”

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