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CFPB Publishes Supervisory Highlights for Fall 2021

Michael Christians • December 14, 2021

The Consumer Financial Protection Bureau's (CFPB) supervisory highlights covering examinations completed between January 2021 and June 2021 was published in the Federal Register on December 14th. The supervisory highlights note examination findings in the areas of credit cards, debt collection, deposit accounts, fair lending, mortgage servicing, payday lending, prepaid accounts, and remittance transfers. Some of the more notable observations are identified below.

Open-End Credit Billing Error Resolution Requirements

Regulation Z generally requires financial institutions to resolve a billing error in connection with a consumer’s open-end credit plan within two full billing cycles. The CFPB identified several instances in which institutions failed to adhere to this timing requirement. By way of reminder, on April 1, 2021, the CFPB rescinded its COVID-19 related policy statement providing financial institutions with additional time to resolve billing errors.

Error Resolution Requirements for P2P Transfers

The CFPB identified several instances in which financial institutions failed to investigate errors in connection with person-to-person transfers (e.g., Venmo, PayPal, etc.) Remember that Regulation E defines an electronic fund transfer (EFT) as any electronically initiated transfer for the purpose of authorizing a financial institution to credit or debit a consumer’s account and unauthorized EFTs must generally be investigated within 10 business days.

Fair Lending

There were a couple of interesting observations made by the CFPB when it comes to fair lending. First, the agency identified pricing discrimination in connection with applications for credit submitted by African American and female borrowers. In several instances, financial institutions failed to grant pricing exceptions to these applicants, yet regularly granted pricing exceptions to others. Second, examiners noted that some institutions improperly requested an applicant’s religious affiliation in connection with his/her application for small business credit.

Mortgage Servicing

There were also several issues identified by the CFPB related to mortgage servicing, including, but not limited to:

Mortgage servicers that imposed late fees and other charges against borrowers in connection with their forbearance programs, in direct violation of the CARES Act
Failing to evaluate a borrower’s completed application for loss mitigation assistance within 30 days
Failing to automatically terminate private mortgage insurance as required by the Homeowner’s Protection Act when the borrower’s loan balance reaches 78% of the original property value.

You can find the CFPB’s full report here.

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