Hello, LOs!
The Consumer Financial Protection Bureau just released its fall supervisory highlights — a laundry list of problems the agency identified in examinations of the business entities they supervise, including mortgage lenders and servicers.
The Bureau didn't name any names in its report. It can't, since, by definition, supervision is confidential, and the Bureau can't initiate legal action because of a supervisory exam. There's no legal requirement for an entity to comply with recommendations stemming from a supervision exam. The secret supervisory process is designed to facilitate open communication and an exchange of data from the lender to the CFPB, free from public scrutiny.
But supervision isn't the endgame for the CFPB.
The Supervision, Enforcement and Fair Lending division can initiate an enforcement investigation as a result of supervisory activity, if it finds a violation of law. And it appears that the Bureau identified violations of fair lending law in at least several instances.
Here are the areas they are probing for mortgage lenders and servicers:
CFPB examiners found that one or more mortgage lenders violated fair lending laws when they gave pricing exceptions. The CFPB found that policies around when to give pricing exceptions were murky and inconsistent, and some lenders had statistically significant disparities for pricing exceptions for Black and female applications. Some lenders had little documentation to support pricing exceptions.
Examiners also found that mortgage servicers — a priority area for the Bureau — made a number of missteps.
The CFPB said mortgage servicers charged delinquency-related fees to borrowers for CARES Act forbearances, and engaged in deceptive acts or practices by incorrectly disclosing transaction and payment information in borrowers' online mortgage loan accounts.
Examiners also found that servicers failed to evaluate borrowers' complete loss mitigation applications in a timely manner, did not adhere to requirements relating to overpayments to borrowers' escrow accounts, and did not automatically end private mortgage insurance by the applicable deadline.
What is your system for handling pricing exceptions? Have you made changes to how you determine whether or not to give an exception, or how you document it? Send an anonymous note to gkromrei@housingwire.com.
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
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