CFPB releases latest supervisory highlights report

The Consumer Financial Protection Bureau this week released the latest edition of its supervisory highlights report. The findings included in the report cover examinations in the areas of automobile loan servicing, deposits, mortgage servicing, and remittances.

The Consumer Financial Protection Bureau this week released the latest edition of its supervisory highlights report. The findings included in the report cover examinations in the areas of automobile loan servicing, deposits, mortgage servicing, and remittances that were generally completed between June and November 2018. This is the 18th edition of the report.

In the area of auto loan servicing, the bureau was focused on identifying unfair, deceptive, or abusive acts or practices. Recent auto loan servicing examinations identified issues related to collecting balances on certain ancillary products, such as extended warranties. If a borrower who financed an ancillary product later experiences a total loss or repossession, the product can be cancelled in order to obtain pro-rated rebates of the premium amounts for any unused portion. In these situations, the rebate is payable first to the servicer to cover any remaining balance and then to the borrower. Potential rebates often are calculated according to the number of miles put on the vehicle, and the bureau found that some servicers were simply using the wrong number of miles, often assuming the maximum possible.

The report also covered the deposits operations of the entities under its supervisory authority for compliance with relevant statutes and regulations. Examination 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 that in instances where a payee accepts only a paper check, the debit may occur earlier than the selected date.

Concerning mortgages, examinations observed that servicers charged consumers late fees greater than the amount permitted by mortgage notes. For example, certain Federal Housing Authority mortgage notes permit servicers to collect late fees in the amount of 4 percent of the overdue principal and interest. However, on large numbers of loans, the servicers calculated late fees on 4 percent of the overdue principal, interest, taxes and insurance.

Examiners also identified mortgage notes containing provisions that limit the late fee amount were often ignored. Programming errors in the servicing platform and lapses in service provider oversight caused the overcharges.

Examinations also revealed that servicers were incorrectly denying cancellation of mortgage insurance by miscalculating the percentage of principal that had been paid when borrowers had paid extra on the principal