Qualified students were blocked from affordable loan repayment plans, according to the most recent installment of the supervisory highlights report from the Consumer Financial Protection Bureau.
In response, the CFPB is issuing updated procedures for student loan servicing exams, which were instituted in 2013. They address the servicing practices affecting borrowers and will guide how examiners assess risks to consumers and review student loan servicers’ compliance with federal consumer financial law.
The report also outlines violations found in auto loan origination and servicing, debt collection, and mortgage origination.
Specific issues highlighted by the bureau include student loan servicers unfairly denying or failing to approve qualified students’ affordable payment plans; and auto loan servicers illegally keeping borrowers’ belongings and debt collectors charging illegal fees and misleading consumers.
The report covers supervisory work completed between May and August 2016. It includes issues CFPB examiners found in student loan servicing, auto loan origination and servicing, debt collection and mortgage origination. Supervisory actions in the areas of deposits, mortgage servicing, and credit cards resulted in $11.3 million in customer restitution, the CFPB said.
“Our examiners continue to find sloppy or callous practices among some student loan servicers and other financial institutions that violate the law and put consumers at risk,” said CFPB Director Richard Cordray. “If their practices hurt consumers, they need to rethink and change their practices in light of the actions and observations found in this report.”
The bureau also released information on compliance with CFPB rules and regulations (including updated guidance on compliance for service providers), new exam policies for reverse mortgage servicing and best practices for improving communication with non-English-speaking consumers.