The latest Supervisory report has been issued by the CFPB.
If you are not familiar with the Supervisory report, it is a synopsis of the actions they have taken against lenders, and a “heads up” to the rest of us as to how to correct our lending practice. The report is anonymous and items are discussed generically, but that does not diminish its value.
The fines were 19.4 Million Dollars. Here are a few tips to avoid writing that check!
- Pay careful attention to their remarks as those remarks announce what you should do better.
- Don’t assume that just because it is credit cards or student loans it would not apply to you. Read between the lines. Patterns of practice flow through all lending types.
- Look closely at your own practices, as compared to their mortgage findings to see if you have any risk gaps.
I’m attaching the full report, but this month here are the highlights:
Mortgage origination violations: Bureau examiners found that some loan originators illegally received compensation based on the terms of the loan. Examiners also found that at some loan originators the amounts disclosed on the HUD-1 form improperly exceeded those disclosed on the Good Faith Estimate. Some loan originators advertised the length of payment, amount of payments, numbers of payments, and finance charges without providing the required disclosures. And, the Bureau found weaknesses in compliance management systems that played a significant role in the identified violations.
What you can do? With TRID right around the corner, you may want to consider centralizing the disclosure duties. With each individual originator issuing their own disclosures, versus a few experts on TRID doing it, you will find your exams much easier and you’ll probably be much more compliant.
And, note the “CMS” word again. Compliance Management Systems done well, make examiners happy and when they are happy they leave sooner!
Fair lending violations: Bureau examiners found that one or more institutions rejected mortgage applications from consumers because they relied on public assistance income, such as Social Security or retirement benefits, in order to repay the loan. Marketing materials contained written statements regarding the prohibition on non-employment sources of income, and discouraged applicants who received public assistance from applying for credit. This violates the Equal Credit Opportunity Act. CFPB examiners directed that remediation be made to harmed applicants.
What to do? Do you know what your originators are putting out there? Are you logging and monitoring Social Media? If you have no CMS in place for this you may get blindsided. The CFPB will heavily review Social Media before you get a letter regarding an exam.
To Read the Supervisory Highlights CLICK HERE!
