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On June 29, the CFPB released its summer 2021 Supervisory Highlights. The findings of the report, which cover examinations that generally were completed between January 1, 2020 to December 31, 2020, are issued to "help institutions and the general public better understand how the Bureau examines institutions for compliance with Federal consumer financial law."
The CFPB noted four particularly concerning findings from the report:
- Consumer reporting companies are accepting information from companies that furnish consumer data, even though there were ample signs that these furnishers were unreliable.
- Discouragement of people in minority neighborhoods from applying for credit by, among other things, locating offices in almost exclusively majority-white neighborhoods, only using pictures of white people in direct mail marketing campaigns, and publishing loan officer headshots of almost exclusively white people.
- Mortgage servicers making the first notice or filing for foreclosure when it was prohibited, and representing to borrowers that they would not initiate a foreclosure action until a specified date, but nevertheless initiated foreclosures prior to that date.
- Student loan servicers misleading consumers to believe they could not access the Public Service Loan Forgiveness (PSLF) program if they had older loans under the Federal Family Education Loan Program (FFELP), even though they could access PSLF by consolidating FFELP loans into Direct Loans.
Finally, the report includes findings that led to public enforcement actions resulting in more than $124 million in consumer remediation and civil money penalties.
Putting It Into Practice: This report confirms the CFPB's focus on fair lending and heightened scrutiny of participants in such markets as student lending, payday lending, auto lending, and mortgages. If past is prologue, expect the current posture of the CFPB to resemble that of its Obama-era predecessors, leveraging its supervision and examination authority and exam findings to identify areas for potential enforcement. Companies should consider best practices for putting themselves in the best position to succeed in the event of examinations. Managing an examination can be an overwhelming undertaking, but advanced preparation and an organized response can go a long way to ensuring a successful outcome.
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