In its latest Supervisory Highlights report, the Consumer Financial Protection Bureau focused on mortgage servicing problems, although it also noted that many nonbanks which fall under CFPB supervision are “more likely to lack robust compliance management systems.” The report highlights examination results from November 2012 to June 2013.
For mortgage servicers, the CFPB narrowed in on careless account transfers, poor payment processing and loss mitigation mistakes as three areas of concern. When problems were found, CFPB examiners “alerted the company to its concerns, specified necessary remedial measures, and, when appropriate, opened CFPB investigations for potential enforcement actions.” Corrective measures for all three areas included “making sure that important papers were filed appropriately, that servicers improved their policies and procedures governing the handling of loans in loss mitigation, and that consumers were treated according to the law.”
The CFPB said that many nonbanks lack a compliance management system (CMS) altogether. Even of those who have a CMS in place, some lack a comprehensive system which exists consistently throughout the entity. A decentralized CMS may lead to an inability to identify underlying problems and recurring errors. The CFPB says that it “has noted violations of Federal consumer financial law that have occurred because a nonbank has failed to address an issue across the entity as a whole.” Additional causes of concern for the CFPB were a lack of formal policies and procedures (specifically, formal written documents) and independent consumer compliance audits.
Although no specific CMS structure is mandated, the CFPB posits four interdependent elements of an effective CMS: board of directors and management oversight, a compliance program, a consumer complaint management program and an independent compliance audit.