CFPB Releases COVID-19 Special Edition Supervision Highlights | Weiner Brodsky Kider PC
The CFPB recently Posted a special edition of its Surveillance Highlights that focuses on the agency’s observations on priority COVID-19 assessments (PAs) conducted last year, which it designed to obtain real-time information from supervised entities operating in markets it considered to have high pandemic risk – consumer damage, including prioritization of markets where Congress has made specific consumer assistance provisions in the CARES Act.
The CFPB explained that PAs were not designed to identify violations of the federal consumer finance law, but rather to identify, assess and communicate the risks of a pandemic to supervised entities so that entities can mitigate. harm to consumers. The PA’s observations were made through targeted information requests that addressed, among other things,: (i) how the entity was helping and communicating with consumers; (ii) the challenges related to COVID-19 facing the entity; (iii) changes made by the entity to its compliance management system (CMS) due to the pandemic; and (iv) information on the entity’s response to the pandemic. Targeted information requests generally covered the period from May 2020 to September 2020.
In addition to various general observations on the commonalities between the entities in dealing with issues related to the pandemic, the CFPB observed that mortgage loan managers faced several significant challenges, including those related to the obligations of the CARES Act and to the evolution of directives to investors. While experiencing operational constraints, resource burdens, and service disruptions among other challenges, service agents were expected to quickly implement the CARES Act abstentions. Risks to the consumer included, but not limited to, service agents:
- provide consumers with incomplete or inaccurate information on abstentions;
- take erroneous actions on borrower accounts for borrowers registered with forbearances (related, for example, to collection and default notices sent, late fees assessed and foreclosures initiated);
- poor management of electronic transfers of pre-authorized funds from borrowers;
- failing to process forbearance requests in a timely manner;
- mistakenly enroll borrowers in automatic or unwanted abstentions; and
- insufficient loss mitigation process.
With regard to consumer and supplier reporting agencies, the CFPB noted that these entities faced challenges in implementing the CARES law changes to the FCRA, which created certain obligations in terms of ‘accommodation. Risks to the consumer included inaccurate accommodation reporting due to supplier delays in processing the volume of accommodation made, insufficient supply policies and procedures, and delayed dispute investigations.
In the area of debt collection, the CFPB observed, among other things, that some entities reported an increase in contacts and payments with consumers, which could be attributed to a greater number of consumers at home, to a reduced expenses and help in the event of a pandemic. Risks to consumers included delays in processing suspensions of administrative salary garnishments, potential FDCPA compliance risks associated with new bank foreclosures or salary garnishments, and delays in processing payments.
The CFPB has observed potential fair loan issues from institutions that provide Paycheck Protection Program (PPP) loans under the CARES Act amendments to the Small Business Act. The risks of equitable loans, which the CFPB asked lenders to consider when implementing the program, included adopting policies limiting access to PPP loans beyond the eligibility criteria of the Law. CARES (eg becoming a client of the institution before requesting the loan from the institution).
The CFPB PA’s observations also included findings in the areas of auto loan servicing, student loan servicing, credit card account management, deposits, and prepaid accounts.