Supervisory Highlights, Issue 22 (Summer 2020), 55828-55840 [2020-19978]
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All forms of tolyltriazole and
benzotriazole, including but not limited to
flakes, granules, pellets, prills, needles,
powder, or liquids, are included within the
scope of this investigation.
The scope includes tolyltriazole/sodium
tolyltriazole and benzotriazole/sodium
benzotriazole that are combined or mixed
with other products. For such combined
products, only the tolyltriazole/sodium
tolyltriazole and benzotriazole/sodium
benzotriazole component is covered by the
scope of this investigation. Tolyltriazole and
sodium tolyltriazole that have been
combined with other products is included
within the scope, regardless of whether the
combining occurs in third countries.
Tolyltriazole, sodium tolyltriazole,
benzotriazole and sodium benzotriazole that
is otherwise subject to this investigation is
not excluded when commingled with
tolyltriazole, sodium tolyltriazole,
benzotriazole, or sodium benzotriazole from
sources not subject to this investigation. Only
the subject merchandise component of such
commingled products is covered by the scope
of this investigation.
A combination or mixture is excluded from
this investigation if the total tolyltriazole or
benzotriazole component of the combination
or mixture (regardless of the source or
sources) comprises less than 5 percent of the
combination or mixture, on a dry weight
basis.
Notwithstanding the foregoing language, a
tolyltriazole or benzotriazole combination or
mixture that is transformed through a
chemical reaction into another product, such
that, for example, the tolyltriazole or
benzotriazole can no longer be separated
from the other products through a distillation
or other process is excluded from this
investigation.
Tolyltriazole has the Chemical Abstracts
Service (CAS) registry number 299385–43–1.
Tolyltriazole is classified under Harmonized
Tariff Schedule of the United States (HTSUS)
subheading 2933.99.8220.
Sodium Tolyltriazole has the CAS registry
number 64665–57–2 and is classified under
HTSUS subheading 2933.99.8290.
Benzotriazole has the CAS registry number
95–14–7 and is classified under HTSUS
subheading 2933.99.8210.
Sodium Benzotriazole has the CAS registry
number 15217–42–2. Sodium Benzotriazole
is classified under HTSUS subheading
2933.99.8290.
Although the HTSUS subheadings and
CAS registry numbers are provided for
convenience and customs purposes, the
written description of the scope of this
investigation is dispositive.
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Appendix II
List of Topics Discussed in the Preliminary
Decision Memorandum
I. Summary
II. Background
III. Period of Investigation
IV. Scope Comments
V. Discussion of the Methodology
VI. Adjustment Under Section 777(A)(F) of
the Act
VII. Adjustment to Cash Deposit Rate for
Export Subsidies
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VIII. Conclusion
[FR Doc. 2020–20010 Filed 9–9–20; 8:45 am]
BILLING CODE 3510–DS–P
DEPARTMENT OF COMMERCE
National Institute of Standards and
Technology
Visiting Committee on Advanced
Technology; Meeting
National Institute of Standards
and Technology, Department of
Commerce.
ACTION: Notice of open meeting.
AGENCY:
National Institute of
Standards and Technology (NIST)’s
Visiting Committee on Advanced
Technology (VCAT or Committee) will
meet on Tuesday, October 20, 2020,
from 10:00 a.m. to 5:00 p.m. Eastern
Time.
DATES: The VCAT will meet on
Tuesday, October 20, 2020, from 10:00
a.m. to 5:00 p.m. Eastern Time.
ADDRESSES: The meeting will be a
virtual meeting via webinar. Please note
admittance instructions under the
SUPPLEMENTARY INFORMATION section of
this notice.
FOR FURTHER INFORMATION CONTACT:
Stephanie Shaw, VCAT, NIST, 100
Bureau Drive, Mail Stop 1060,
Gaithersburg, Maryland 20899–1060,
telephone number 301–975–2667. Ms.
Shaw’s email address is
stephanie.shaw@nist.gov.
SUPPLEMENTARY INFORMATION: Authority:
15 U.S.C. 278, as amended, and the
Federal Advisory Committee Act, as
amended, 5 U.S.C. App.
Pursuant to the Federal Advisory
Committee Act, as amended, 5 U.S.C.
App., notice is hereby given that the
VCAT will meet on Tuesday, October
20, 2020, from 10:00 a.m. to 5:00 p.m.
Eastern Time. The meeting will be open
to the public. The VCAT is composed of
not fewer than 9 members appointed by
the NIST Director, eminent in such
fields as business, research, new
product development, engineering,
labor, education, management
consulting, environment, and
international relations. The primary
purpose of this meeting is for the VCAT
to review and make recommendations
regarding general policy for NIST, its
organization, its budget, and its
programs within the framework of
applicable national policies as set forth
by the President and the Congress. The
agenda will include an update on major
programs at NIST including a
programmatic update, an update on
NIST operations and impacts regarding
SUMMARY:
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the COVID–19 pandemic, strategic plan
implementations, and NIST’s role in
America’s innovation ecosystem, as well
as its efforts to modernize technology
transfer. The agenda may change to
accommodate Committee business. The
final agenda will be posted on the NIST
website at https://www.nist.gov/director/
vcat/agenda.cfm.
Individuals and representatives of
organizations who would like to offer
comments and suggestions related to the
Committee’s business are invited to
request a place on the agenda.
Approximately one-half hour will be
reserved for public comments and
speaking times will be assigned on a
first-come, first-serve basis. The amount
of time per speaker will be determined
by the number of requests received but,
is likely to be about 3 minutes each. The
exact time for public comments will be
included in the final agenda that will be
posted on the NIST website at https://
www.nist.gov/director/vcat/agenda.cfm.
Questions from the public will not be
considered during this period. Speakers
who wish to expand upon their oral
statements, those who had wished to
speak but could not be accommodated
on the agenda, and those who were
unable to attend via webinar are invited
to submit written statements to
Stephanie Shaw at stephanie.shaw@
nist.gov.
All participants will be attending via
webinar and must contact Ms. Shaw at
stephanie.shaw@nist.gov by 5:00 p.m.
Eastern Time, Wednesday, October 14,
2020 for detailed instructions on how to
join the webinar.
Kevin A. Kimball,
Chief of Staff.
[FR Doc. 2020–19933 Filed 9–9–20; 8:45 am]
BILLING CODE 3510–13–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
Supervisory Highlights, Issue 22
(Summer 2020)
Bureau of Consumer Financial
Protection.
ACTION: Supervisory Highlights.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau) is issuing
its twenty second edition of Supervisory
Highlights. In this issue of Supervisory
Highlights, we report examination
findings in the areas of consumer
reporting, debt collection, deposits, fair
lending, and mortgage servicing that
were completed between September
2019 and December 2019. The report
does not impose any new or different
SUMMARY:
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legal requirements, and all violations
described in the report are based only
on those specific facts and
circumstances noted during those
examinations.
2. Supervisory Observations
Recent supervisory observations are
reported in the areas of consumer
reporting, debt collection, deposits, fair
lending, and mortgage servicing.
The Bureau released this edition
of the Supervisory Highlights on its
website on September 4, 2020.
2.1 Consumer Reporting
Entities that obtain or use consumer
reports from consumer reporting
companies (CRCs),2 or that furnish
information to CRCs for inclusion in
consumer reports, play a vital role in the
consumer reporting process. They are
subject to several requirements under
the Fair Credit Reporting Act (FCRA) 3
and its implementing regulation,
Regulation V,4 including the
requirement to only obtain or use
reports for a permissible purpose, and to
furnish data subject to the relevant
accuracy and dispute handling
requirements. In one or more recent
furnishing reviews, examiners found
deficiencies in user and furnisher
compliance with FCRA permissible
purpose, accuracy, and dispute
investigation requirements.
DATES:
FOR FURTHER INFORMATION CONTACT:
Jaclyn Sellers, Counsel, at (202) 435–
7449. If you require this document in an
alternative electronic format, please
contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
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1. Introduction
The Consumer Financial Protection
Bureau (Bureau) is committed to a
consumer financial marketplace that is
free, innovative, competitive, and
transparent, where the rights of all
parties are protected by the rule of law,
and where consumers are free to choose
the products and services that best fit
their individual needs. To effectively
accomplish this, the Bureau remains
committed to sharing with the public
key findings from its supervisory work
to help industry limit risks to
consumers and comply with Federal
consumer financial law.
The findings included in this report
cover examinations in the areas of
consumer reporting, debt collection,
deposits, fair lending, and mortgage
servicing that were completed between
September 2019 and December 2019.1
It is important to keep in mind that
institutions are subject only to the
requirements of relevant laws and
regulations. The information contained
in Supervisory Highlights is
disseminated to help institutions better
understand how the Bureau examines
institutions for compliance with those
requirements. This document does not
impose any new or different legal
requirements. In addition, the legal
violations described in this and
previous issues of Supervisory
Highlights are based on the particular
facts and circumstances reviewed by the
Bureau as part of its examinations. A
conclusion that a legal violation exists
on the facts and circumstances
described here may not lead to such a
finding under different facts and
circumstances.
We invite readers with questions or
comments about the findings and legal
analysis reported in Supervisory
Highlights to contact us at CFPB_
Supervision@cfpb.gov.
1 This time frame refers to the Supervisory
Observations section only.
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2.1.1 Prohibition Against Using or
Obtaining Consumer Reports Without a
Permissible Purpose
The FCRA prohibits a person from
using or obtaining a consumer report
unless the consumer report is obtained
for a purpose authorized by the FCRA.5
This prohibition protects the privacy of
consumers and prevents the potential
negative impact of certain inquiries.
Examiners found that one or more
lenders obtained consumers’ credit
reports without a permissible purpose.
In reviewing files for compliance with
permissible purpose requirements,
examiners found that the lenders’
employees obtained consumers’ credit
reports from a CRC without first
establishing that the lenders had a
permissible purpose to obtain the report
under the FCRA. After identification of
these issues, one or more lenders
revised permissible purpose policies,
procedures, and training materials.
While consumer consent is not required
by the FCRA when a lender has another
permissible purpose to obtain the
consumer’s report, one or more
mortgage lenders decided to require that
the lender’s employees document
consumer consent prior to obtaining the
2 The term ‘‘consumer reporting company’’ means
the same as ‘‘consumer reporting agency,’’ as
defined in the Fair Credit Reporting Act, 15 U.S.C.
1681a(f), including nationwide consumer reporting
agencies as defined in 15 U.S.C. 1681a(p) and
nationwide specialty consumer reporting agencies
as defined in 15 U.S.C. 1681a(x).
3 15 U.S.C. 1681 et seq.
4 12 CFR part 1022.
5 15 U.S.C. 1681b(f).
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consumers’ credit reports, as an
additional precaution to ensure that the
lender had a permissible purpose to
obtain the consumers’ reports.
2.1.2 Furnisher Duty To Provide
Notice of Delinquency of Accounts
The FCRA requires furnishers of
information regarding delinquent
accounts to report the date of
delinquency to the CRC within 90
days.6 The FCRA specifies that the date
of first delinquency reported by the
furnisher ‘‘shall be the month and year
of the commencement of the
delinquency on the account that
immediately preceded the action.’’ 7
In one or more examinations of thirdparty debt collection furnishers,
examiners found that the furnishers
failed to establish and follow reasonable
procedures to obtain the actual date of
first delinquency from their clients.
Instead, they furnished a date they knew
or had reason to believe was an
incorrect date of first delinquency. The
third-party debt collection furnishers
were furnishing information about
cable, satellite, and telecommunications
accounts. The furnishers reported, as
the date of first delinquency, the date
that the consumer’s service was
disconnected, despite
telecommunications companies
routinely disconnecting service several
months after the first missed payment
that commenced the delinquency. In
addition, in one or more examinations
of third-party debt collection furnishers,
examiners found the furnisher provided
the charge-off date as the date of first
delinquency, which is often several
months after the commencement of
delinquency. Subsequent to these
findings, one or more furnishers ceased
operations.
2.1.3 Duty To Conduct Reasonable
Investigation of Disputes
For disputes filed directly with
furnishers, Regulation V requires
furnishers to conduct a reasonable
investigation with respect to the
disputed information and review all
relevant information provided by the
consumer with the dispute notice.8
Similarly, for indirect disputes filed
with CRCs, the FCRA requires that,
upon receiving notice of the dispute
from the CRC, the furnisher must
conduct an investigation with respect to
the disputed information and review all
relevant information provided by the
6 15 U.S.C. 1681s–2(a)(5)(A). This provision
applies to accounts being placed for collection,
charged to profit or loss, or subjected to similar
action.
7 Id.
8 12 CFR 1022.43(e)(1–2).
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CRC.9 In one or more examinations,
examiners found that, for both direct
and indirect disputes, the furnishers
failed to review underlying account
information and documentation,
account history notes, or dispute-related
correspondence provided by the
consumer to assess what reasonable
investigative steps would be necessary.
Inadequate staffing and high daily
dispute resolution requirements
contributed to the furnishers’ failure to
conduct reasonable investigations. As
with the findings described above in
section 2.1.2, subsequent to these
findings, one or more furnishers ceased
operations.
2.2
Debt Collection
The Bureau has the supervisory
authority to examine certain entities
that engage in consumer debt collection
activities, including nonbanks that are
larger participants in the consumer debt
collection market.10 Recent
examinations of larger participant debt
collectors identified one or more
violations of the Fair Debt Collection
Practices Act (FDCPA).
2.2.1 False Litigation Threats and
Misrepresentations Regarding Litigation
Section 807(5) of the FDCPA prohibits
‘‘[t]he threat to take any action that
cannot legally be taken or that is not
intended to be taken.’’ 11 Section
807(10) prohibits ‘‘[t]he use of any false
representation or deceptive means to
collect or attempt to collect any debt
. . . .’’ 12 Examiners found that one or
more debt collectors falsely threatened
consumers with lawsuits that the
collectors could not legally file or did
not intend to file, in violation of section
807(5). Examiners also determined that
one or more debt collectors made false
representations regarding the litigation
process and a consumer’s obligations in
the event of litigation, in violation of
section 807(10). In response to these
findings, the debt collectors are making
changes to their training, scripts,
monitoring, and other compliance
processes.
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2.2.2 False Implication That Debt
Could Be Reported to CRCs
Section 807(10) of the FDCPA
prohibits ‘‘[t]he use of any false
representation or deceptive means to
collect or attempt to collect any debt
. . . .’’ 13 Examiners observed that one
or more debt collectors made implied
9 15
U.S.C. 1681s–2(b)(1)(A)–(B).
CFR 1090.
11 15 U.S.C. 1692e(5).
12 15 U.S.C. 1692e(10).
13 Id.
10 12
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representations to consumers that they
would report their debts to CRCs 14 if
they were not paid by a certain date.
The debt collectors did not report debts
to CRCs for the relevant clients.
Examiners concluded that the debt
collectors’ statements were false
representations that violated section
807(10). In response to these findings,
the debt collectors are making changes
to their training and monitoring.
2.2.3 False Representation That Debt
Collector Is a CRC
Section 807(16) of the FDCPA
prohibits ‘‘[t]he false representation or
implication that a debt collector
operates or is employed by a consumer
reporting agency . . . .’’ 15 Examiners
observed that one or more debt
collectors falsely represented or implied
to consumers that they operated or were
employed by CRCs in violation of
section 807(16). In response to these
findings, the debt collectors are making
changes to their training and
monitoring.
2.3 Deposits
The CFPB continues to examine banks
for compliance with Regulation E,16
which implements the Electronic Fund
Transfer Act (EFTA). EFTA establishes
a legal framework for the offering and
use of electronic fund transfer services
and remittance transfer services.17 The
CFPB also continues to review the
deposits operations of the entities under
its supervisory authority for compliance
with relevant statutes and regulations,
including Regulation DD,18 which
implements the Truth in Savings Act.19
2.3.1 Waivers of Consumers’ Error
Resolution and Stop Payment Rights
and Financial Institutions’ Liability
EFTA states that ‘‘no writing or other
agreement between a consumer and any
other person may contain any provision
which constitutes a waiver of any right
conferred or cause of action created by
this subchapter.’’ 20 EFTA and
Regulation E state that consumers have
a right to have their claims of error
investigated if their notice of error meets
certain criteria.21 As described below,
the criteria does not include agreeing to
‘‘cooperate’’ with the financial
14 As noted above in Footnote 2, the term
‘‘consumer reporting company’’ means the same as
‘‘consumer reporting agency,’’ as defined in the
FCRA, 15 U.S.C. 1681a(f).
15 15 U.S.C. 1692e(16).
16 12 CFR 1005.
17 12 U.S.C. 1693.
18 12 CFR 1030.
19 Id.
20 15 U.S.C. 1693l.
21 15 U.S.C. 1693f and 12 CFR 1005.11(b)(1).
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institution’s error investigation. EFTA
and Regulation E together establish that
consumers have a right to have a
financial institution investigate their
error subject only to the requirements
set forth in EFTA and Regulation E.
Examiners found that one or more
financial institutions required
consumers to sign deposit account
agreements that stated that the
consumers would ‘‘cooperate’’ with the
institution’s investigation of any errors
filed by the consumer. The
‘‘cooperation’’ included providing
affidavits and notifying law enforcement
authorities. By requiring consumers to
‘‘cooperate’’ with Regulation E error
investigations and provide information
beyond that which is required in EFTA
and Regulation E, the financial
institutions’ agreements contained
provisions that waived consumers’
rights in violation of EFTA.
EFTA and Regulation E also provide
consumers with rights to stop
preauthorized payments.22 Under
EFTA, consumers have the right to stop
payment, subject only to those
limitations set forth in EFTA and
Regulation E.23 Regulation E contains a
comprehensive list of actions consumers
must take in order to make an effective
request to stop payment.24 The list does
not include agreeing to indemnify and
hold the financial institution harmless
for costs that may arise from honoring
the valid stop payment request or
agreeing not to hold the institution
liable if it is unable to stop payment due
to inadvertence, accident, or oversight.
Examiners found that one or more
financial institutions required
consumers to sign stop payment request
forms and deposit agreements in which
the consumers agreed to indemnify and
hold the institutions harmless for
various claims and expenses arising
from the institutions honoring stop
payment requests. This included not
holding the financial institutions liable
if they were unable to stop the payment
due to inadvertence, accident, or
oversight. As this language requires
more of consumers than EFTA and
Regulation E allow, the stop payment
forms and deposit agreements
impermissibly waived consumers’ rights
in violation of, and waived the
institutions’ liability under, EFTA and
Regulation E for certain failures to stop
payment.25
In response to the examiners’
findings, the financial institutions
22 15
U.S.C. 1693e and 12 CFR 1005.10(c).
U.S.C. 1693e and 1693l and 12 CFR
1005.10(c)(1).
24 12 CFR 1005.10(c)(1).
25 15 U.S.C. 1693h and 1693l.
23 15
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revised their deposit agreements and
stop payment forms to ensure they do
not contain any waivers of rights in
violation of EFTA.
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2.3.2 Reliance on Incorrect Date To
Assess Timeliness of EFT Error Notice
Regulation E requires that financial
institutions comply with specific
requirements with respect to qualifying
oral or written notices of an EFT error.
With respect to timing, EFTA and
Regulation E require that the oral or
written notice must be received by the
institution ‘‘no later than 60 days after
the institution sends the periodic
statement . . . on which the alleged
error is first reflected.’’ 26
Examiners found that one or more
financial institutions required that EFT
notice errors relating to ACH
transactions be received within 60 days
of the date of the transactions. For
claims received after 60 days from the
date of the transaction, the institutions
treated the error notice as late, and
would request permission from the
merchant’s bank to reverse the charges.
The financial institutions revised
their policies on EFT error notice
processing to comply with the
Regulation E timing requirements.
2.3.3 Violation of Error Results Notice
Requirements
Both section 908(a) of EFTA and
Regulation E require a financial
institution investigating an alleged EFT
error to communicate to consumers,
among other elements, (1) the
investigation determination; and (2) an
explanation of the determination when
it determines that no error or a different
error occurred within its report of
results.27
To give purpose to both obligations,
the meaning of an ‘‘explanation’’ is not
synonymous with that of a
‘‘determination.’’ Financial institutions
must go beyond just providing the
findings to actually explain or give the
reasons for or cause of those findings.
Examiners found that one or more
financial institutions violated
Regulation E by failing to provide an
explanation of its findings within the
report of results. In addition, examiners
found that one or more financial
institutions violated Regulation E by
providing an inaccurate or irrelevant
response to the consumer when it
determined that no error or a different
error occurred.28
Regulation E also requires financial
institutions to note, in the report of
results, the consumer’s right to request
the documents that the institution relied
on in making its determination when
the institution determines no error or a
different error occurred.29 Examiners
found that one or more financial
institutions’ reports of results letters
sent to consumers after determining that
no error or a different error occurred,
were missing the required notice of the
consumer’s right to request the
documents that the institution relied on
in making its determination, as required
by Regulation E.30
In response to the examiners’
findings, the financial institutions
undertook a revision of its report of
results templates used when the
financial institutions determine no error
or different error occurred to ensure that
the letter provides: (a) The
determination; (b) an explanation of the
financial institution’s findings; and, (c)
a statement noting the consumer’s right
to request the documents that the
financial institutions relied on in
making its determination, as required by
Regulation E.31
2.3.4 Failure To Fulfill Advertised
Bonus Offer
Regulation DD requires that
advertisements of deposit accounts not
mislead, be inaccurate, or misrepresent
the financial institution’s deposit
contract.32
Examiners found that one or more
financial institutions advertised bonuses
for consumers who opened an account
at the financial institutions and met
certain requirements that the
advertisement specified. These financial
institutions failed to provide the
promised bonuses in instances where
consumers met the requirements. The
financial institutions did not have
appropriate quality control and
monitoring procedures to ensure all
eligible consumers received the bonus.
Therefore, the advertisement of bonus
offer was misleading and inaccurate in
violation of Regulation DD.
In response to the examiners’
findings, the financial institutions
enhanced their account opening
training, as well as monitoring and
quality control procedures, to ensure
that consumer accounts were correctly
coded as bonus-eligible and that all
consumers eligible for the advertised
bonuses received them.
2.4
Fair Lending
The Bureau’s fair lending supervision
program assesses compliance with the
Equal Credit Opportunity Act (ECOA) 33
and its implementing regulation,
Regulation B,34 as well as the Home
Mortgage Disclosure Act (HMDA) 35 and
its implementing regulation, Regulation
C,36 at banks and nonbanks over which
the Bureau has supervisory authority.
Examiners found one or more lenders
engaged in violations of ECOA and
Regulation B.
2.4.1
Redlining
Regulation B prohibits
discouragement of ‘‘applicants or
prospective applicants’’ and it also
states: ‘‘A creditor shall not make any
oral or written statement, in advertising
or otherwise, to applicants or
prospective applicants that would
discourage on a prohibited basis a
reasonable person from making or
pursuing an application.’’ 37 The Official
Interpretations of Regulation B also
explains that Regulation B ‘‘covers acts
or practices directed at prospective
applicants that could discourage a
reasonable person, on a prohibited
basis, from applying for credit.’’ 38
In the course of conducting
supervisory activity of bank and
nonbank mortgage lenders, examiners
have observed that one or more lenders
violated ECOA and Regulation B,
intentionally redlining majorityminority neighborhoods in two
Metropolitan Statistical Areas (MSAs)
by engaging in acts or practices directed
at prospective applicants that may have
discouraged reasonable people from
applying for credit.
Examiners determined that the
lenders used marketing that would
discourage reasonable persons on a
prohibited basis from applying to the
lenders for a mortgage loan. First, the
lenders advertised in a publication with
a wide circulation in the MSAs, on a
weekly basis, for two years. These ads
prominently featured a white model.
Second, the lenders’ marketing
materials, which were intended to be
distributed to consumers by the lenders’
retail loan originators, featured almost
exclusively white models. Third, the
lenders included headshots of the
lenders’ mortgage professionals in
nearly all its open house marketing
materials, and in almost all these
33 12
U.S.C. 1691.
CFR 1002.
35 12 U.S.C. 2801.
36 12 CFR 1003.
37 12 CFR 1002.4(b).
38 12 CFR part 1002, supp. I, para. 4(b)–1.
34 12
26 12
29 Id.
27 12
30 Id.
CFR 1005.11(b)(1)(i).
U.S.C. 1693f(a) and 1693f(d) and 12 CFR
1005.11(d)(1).
28 Id.
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31 Id.
32 12
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materials, the headshots showed
professionals who appeared to be white.
The statistical analysis of the HMDA
data and U.S. Census data provided
evidence regarding the lenders’ intent to
discourage prospective applicants from
majority-minority neighborhoods.
General and refined peer analyses
showed that the lenders received
significantly fewer applications from
majority-minority and high-minority
neighborhoods 39 relative to other peer
lenders in the MSAs. Also, the lenders’
direct marketing campaign that focused
on majority-white areas in the MSAs
provided additional evidence of the
lenders’ intent to discourage prospective
applicants on a prohibited basis.
In response to the examination
findings, lenders implemented outreach
and marketing programs focused on
increasing their visibility among
consumers living in or seeking credit in
majority-minority census tracts in the
MSAs. One or more lenders also are
improving compliance management
systems, including board and
management oversight, monitoring and/
or audit programs, and handling of
consumer complaints.
2.4.2 Failure To Consider Public
Assistance Income
The ECOA states that it is ‘‘unlawful
for any creditor to discriminate against
any applicant, with respect to any
aspect of a credit transaction . . .
because all or part of the applicant’s
income derives from any public
assistance program.’’ 40 The Official
Interpretation of Regulation B defines
‘‘public assistance program’’ as follows:
‘‘Any Federal, State, or local
governmental assistance program that
provides a continuing, periodic income
supplement, whether premised on
entitlement or need, is ‘public
assistance’ for purposes of the
regulation. The term includes (but is not
limited to) Temporary Aid to Needy
Families, food stamps, rent and
mortgage supplement or assistance
programs, social security and
supplemental security income, and
unemployment compensation.’’ 41
Regulation B allows a creditor to
‘‘consider the amount and probable
continuance of any income in
evaluating an applicant’s
creditworthiness.’’ 42 However, the
Official Interpretation further provides
that ‘‘[i]n considering the separate
components of an applicant’s income,
39 Examination teams defined majority-minority
areas as >50% minority and high-minority areas as
>80% minority.
40 15 U.S.C. 1691(a)(2).
41 12 CFR part 1002, supp. I, para. 2(z)–(3).
42 12 CFR 1002.6(b)(5).
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the creditor may not automatically
discount or exclude from consideration
any protected income. Any discounting
or exclusion must be based on the
applicant’s actual circumstances.’’ 43
Examiners found that one or more
lenders violated ECOA and Regulation B
by maintaining a policy and practice
that excluded certain forms of public
assistance income, without considering
the applicant’s actual circumstances
including unemployment compensation
and SNAP benefits, commonly known
as food stamps, from consideration in
determining a borrower’s eligibility for
mortgage modification programs. One or
more lenders acknowledged that they
excluded certain types of public
assistance income from income
calculations when evaluating loss
mitigation applications, even though the
lenders did not have written policies
directing the practice. Examiners
identified several instances whereby the
applicant listed certain forms of public
assistance income in the loss mitigation
application. In each instance, the
lenders excluded the public assistance
income from their income calculations
and, in certain instances, the applicant
was denied a loss mitigation option due
to insufficient income.
In response to the examination
findings, the lenders updated policies
and procedures and enhanced training
to ensure that their practices concerning
public assistance income comply with
ECOA and Regulation B. In addition,
lenders identified borrowers who, due
to their reliance on certain forms of
public assistance income, were denied
mortgage modifications or otherwise
harmed. The lenders provided such
borrowers with financial remuneration
and an appropriate mortgage
modification.
2.5
Mortgage Servicing
Recent mortgage servicing
examinations have identified various
Regulation Z and Regulation X
violations. These include violations of
Regulation Z requirements to provide
consumers in bankruptcy with periodic
statements and violations of Regulation
X provisions related to force-placed
insurance and escrow accounts. In the
context of loan transfers, examiners
identified violations of Regulation X
requirements to provide servicing
transfer notices and exercise reasonable
diligence to complete a loss mitigation
application; violations of FDCPA
requirements to provide debt validation
notices; and violations of Regulation Z
requirements to credit payments as of
the date of receipt and provide mortgage
loan ownership transfer disclosures.
Additionally, examiners identified one
or more ECOA violations for failure to
consider certain forms of public
assistance income when considering
borrowers for mortgage modification
programs (that violation is summarized
in the fair lending section of this issue).
2.5.1 Failure To Provide Consumers in
Bankruptcy With Periodic Statements
In general, Regulation Z requires
servicers to provide consumers with
closed-end mortgage loans with periodic
statements that meet certain
requirements.44 Prior to April 2018,
servicers were not required to provide
periodic statements to consumers in
bankruptcy. After April 2018, servicers
are required to provide periodic
statements when any consumer on the
mortgage loan is in bankruptcy, unless
an exemption is met.45
Examiners found that one or more
servicers violated Regulation Z by
failing to provide periodic statements
when a consumer on the loan was in
Chapter 12 or Chapter 13 Bankruptcy.
Examiners found that causes included
system limitations and failure to
reconcile accounting records. The
servicers contracted with third parties to
maintain records regarding costs related
to bankruptcy. However, these records
were not reconciled with the servicers’
systems of record, so the servicers were
unable to provide accurate information
about the total amount due, payment
history, costs, and fees associated with
the account. Instead of reconciling the
amounts to enable them to send
accurate statements, for a period of time
servicers did not send statements when
a consumer was in in Chapter 12 or
Chapter 13 Bankruptcy. In response to
these findings, the servicers developed
a process to reconcile accounting
records and began sending periodic
statements to consumers in Chapter 12
or Chapter 13 Bankruptcy in accordance
with the regulation.
2.5.2 Failure To Have a Reasonable
Basis for Charging Borrowers for ForcePlaced Insurance
Under Regulation X, a servicer may
not assess a borrower a premium charge
or fee for force-placed insurance unless
the servicer has a ‘‘reasonable basis’’ to
believe that the borrower failed to
maintain required hazard insurance.46
44 12
43 12
CFR part 1002, supp. 1, para. 6(b)(5)–(3)(ii);
see also id. at 6(b)(5)–(1) (‘‘A creditor must evaluate
income derived from . . . public assistance on an
individual basis. . . .’’).
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CFR 1026.41(a).
12 CFR 1026.41(e)(5); 81 FR 72160 (Oct. 19,
2016), available at: https://www.govinfo.gov/
content/pkg/FR-2016-10-19/pdf/2016-18901.pdf.
46 12 CFR 1024.37(b).
45 See
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Examiners found that one or more
servicers violated Regulation X by
charging borrowers for force-placed
insurance without a reasonable basis for
believing that the consumer had not
maintained required hazard insurance.
Examiners found that in some instances
borrowers had provided their servicers
with proof of required hazard insurance
policies, either directly or through their
insurance companies. However, the
servicers failed to update their systems
of record to reflect receipt of this
information and subsequently charged
borrowers for force-placed insurance.
Examiners observed that this violation
was caused by inadequate procedures
and lack of adequate staffing. In other
instances, the servicers received a bill
for the borrowers’ hazard insurance but
did not assign it to the proper account.
The servicers later charged borrowers
for force-placed insurance, despite not
having a reasonable basis to believe that
the borrowers lacked hazard insurance.
Examiners attributed this violation to a
weakness in service provider oversight.
In response to these findings, the
servicers are improving service provider
oversight or hiring new service
providers to manage force-placed
insurance charges.
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2.5.3 Failure To Timely Refund All
Force-Placed Insurance Charges for
Overlapping Coverage
Regulation X generally requires a
servicer to cancel force-placed
insurance and refund force-placed
insurance premium charges for any
period where a consumer provides
evidence of overlapping insurance
coverage within 15 days of receiving the
evidence of coverage.47
Examiners found that one or more
servicers violated Regulation X by
failing to cancel force-placed insurance
and refund charges within 15 days of
receiving evidence of overlapping
insurance coverage. Examiners observed
that this was caused by failure to
process proof of insurance and
insufficient staffing. In response to these
findings, the servicers are improving
management of force-placed insurance
programs to ensure timely cancellation
of force-placed insurance and timely
refunds to borrowers.
2.5.4 Permitted Repayment Options in
Annual Escrow Statements
Under Regulation X, servicers
generally must annually complete an
escrow analysis and determine the
‘‘target balance’’ in an escrow account
for the next escrow computation year.48
47 12
48 12
CFR 1024.37(g)(1) & (2).
CFR 1024.17(c)(3).
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If the escrow account balance is below
the ‘‘target balance,’’ there is a
‘‘shortage;’’ if the consumer’s escrow
account balance is negative, then there
is a ‘‘deficiency.’’ 49 Regulation X
provides specific permitted options for
servicers as to the treatment of shortages
and deficiencies. Which options are
available depends in part on the extent
of the shortage or deficiency.50 For
example, for shortages equal to or
greater than one month’s escrow
account payment, the servicer must
either (1) allow the shortage to exist and
do nothing to change it; or (2) require
repayment of the shortage in equal
monthly payments over at least a 12month period.51 For deficiencies equal
to or greater than one month’s escrow
account payment, the servicer must
either (1) allow the deficiency to exist
and do nothing to change it; or (2)
require repayment of the deficiency in
equal monthly payments over a period
of 2 months or more.52 Regulation X
also requires servicers to send borrowers
annual escrow account statements
which must include ‘‘[a]n explanation
of how any shortage or deficiency is to
be paid by the borrower.’’ 53
Examiners found that one or more
servicers sent consumers annual escrow
account statements which included
options for repayment of shortages and
deficiencies that are not enumerated in
Regulation X. Specifically, for borrowers
with either shortages or deficiencies
equal to or greater than one month’s
escrow account payment, servicers
listed two options borrowers could
choose for repayment: (1) Equal
monthly payments over a 12-month
period or (2) a lump sum payment. The
first option is a permitted repayment
option under Regulation X, while the
second option is not.54 Regulation X
requires that annual escrow account
statements include an explanation of
how shortages or deficiencies are to be
paid by borrowers.55 Because the
enumerated repayment options are
exclusive, the servicers violated the
regulatory requirements by sending
disclosures that provided borrowers
with repayment options that they
cannot require under Regulation X.56
In response to these findings, the
servicers are amending their annual
escrow disclosures to only include
CFR 1024.17(b).
CFR 1024.17(f)(3) & (4).
51 12 CFR 1024.17(f)(3)(ii).
52 12 CFR 1024.17(f)(4)(ii).
53 12 CFR 1024.17(i)(1)(vii).
54 See 12 CFR 1024.17(f)(3) & (4).
55 12 CFR 1024.17(i)(1)(vii).
56 See 12 CFR 1024.17(i)(1)(vii).
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repayment options they are permitted to
require under Regulation X.
2.5.5 Violations After Servicing
Transfers
Examiners have identified various
violations after servicing transfers,
including: Failure to provide an
accurate effective date for the transfer of
servicing in the required notice of
servicing transfer; 57 failure to exercise
reasonable diligence to obtain
documents and information necessary to
complete a loss mitigation
application; 58 failure to credit a
periodic payment as of the date of
receipt; 59 and, when a servicer is acting
as a debt collector, failure to provide a
validation notice within 5 days of the
initial communication with the
borrower when such notice is
required.60
For example, in the context of loans
with loss mitigation applications in
process at the time of the transfer,
certain applications were virtually
complete, but some transferee servicers
asked borrowers to submit new
applications, leading examiners to
conclude that servicers had failed to
exercise reasonable diligence to obtain
the information necessary to complete
these loss mitigation applications as the
regulation requires. Examiners found
that these violations were caused by
errors during the onboarding process as
well as inadequate policies and
procedures. In response to these
findings, the servicers increased
attention to due diligence during
servicing transfers and improved
relevant policies and procedures to
prevent violations in future servicing
transfers.
2.5.6 Failure To Provide Loan
Ownership Transfer Disclosures
Regulation Z generally requires that
when ownership of a loan transfers, the
new owner must send a disclosure with
required content to consumers.61
Examiners found that one or more
servicers failed to send consumers the
mortgage transfer disclosure after
acquiring the loans, in violation of
Regulation Z. In response to these
findings, the servicers are reviewing the
contracts that assign responsibilities
between transferees and transferors and
reinforcing the regulatory requirements
internally; servicers who violated the
rule will send mortgage transfer
49 12
50 12
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57 12
CFR 1024.33(b)(4)(i).
CFR 1024.41(b)(1).
59 12 CFR 1026.36(c)(1)(i).
60 15 U.S.C. 1692g(a). The notice is required
unless the information is contained in the initial
communication or the consumer has paid the debt.
61 12 CFR 1026.39(b).
58 12
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disclosures after future transfers in
accordance with Regulation Z.
2.6 Payday Lending
The Bureau’s Supervision program
covers entities that offer or provide
payday loans. Examinations of these
lenders identified deceptive acts or
practices and violations of Regulation Z.
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2.6.1 Misleading Representations
About the Ability To Apply for a Loan
Online
Sections 1031 and 1036(a)(1)(b) of the
Consumer Financial Protection Act
(CFPA) prohibit a covered person such
as a payday lender from engaging in any
unfair, deceptive, or abusive act or
practice.62 A representation, omission,
or practice is deceptive if: (1) The
representation, omission, or practice
misleads or is likely to mislead the
consumer; (2) the consumer’s
interpretation of the representation,
omission, or practice is reasonable
under the circumstances; and (3) the
misleading representation, omission, or
practice is material.63
Examiners found that one or more
lenders engaged in deceptive acts or
practices in violation of the CFPA when
they represented on websites and in
mailed advertising that consumers
could apply for payday loans online.
Examiners found the representations
misled or were likely to mislead
consumers. Although consumers could
enter limited information online, the
lenders required them to visit physical
storefront locations to re-enter
information and complete the loan
application process. A consumer could
reasonably interpret the express and
indirect representations to mean they
could complete the application process
online. The representations were
material because they were likely to
affect consumer decisioning. For
example, a consumer could have chosen
to apply with a different lender who had
a faster or otherwise more convenient
process. In response to examination
findings, the entity or entities ceased
misleading advertising on websites and
in mailed advertising, and implemented
enhanced advertising policies and
procedures and oversight.
2.6.2 False Representation That No
Credit Check Will Be Conducted
Examiners observed one or more
lenders engaged in deceptive acts or
practices in violation of the CFPA when
they falsely represented on proprietary
websites, social media, and other
62 12
U.S.C. 5531, 5536(a)(1)(B).
FTC Policy Statement on Deception,
appended to In re Cliffdale Assoc., Inc., 103 F.T.C.
110, 174 (1984).
63 See
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advertising that they would not conduct
a credit check. In fact, the lenders used
consumer reports from at least one CRC
in determining whether to extend credit.
It was reasonable for a consumer to
interpret the representations as meaning
that the lenders would not check a
consumer’s credit history when
deciding whether to extend credit, and
the representations were material
because they were likely to affect
consumers’ conduct with respect to
loans. Prospective customers may have
had credit history concerns and made a
different choice. In response to the
examination findings, one or more
lenders ceased making misleading
representations online and elsewhere,
and implemented enhanced advertising
policies and procedures and oversight.
2.6.3 False Threats of Lien Placement
or Asset Seizure
Examiners found one or more lenders
engaged in deceptive acts or practices
by sending collection letters that falsely
threatened lien placement or asset
seizure if consumers did not make
payments, although the entities did not
take those measures. Moreover, certain
consumer assets may have been exempt
from lien or seizure under State law. It
was reasonable for consumers to
interpret the representations to mean
that the entities could and would take
such measures, and the statements were
material because consumers may have
made different payment choices had
they known the representations were
false. In response to the examination
findings, one or more entities ceased
including the erroneous information in
collection letters.
2.6.4 False Threats of Being Subject to
Late Payment Fee
Examiners found one or more lenders
engaged in deceptive acts or practices
by sending collection letters that falsely
threatened to charge late fees if
consumers did not make payments,
even though the entities did not charge
late fees. A consumer could reasonably
interpret the representations as meaning
that the entities would charge late fees
absent payment. Such threats were
material, because they were likely to
affect consumers’ payment choices. In
response to the findings, one or more
lenders ceased including the false
statements in collection letters.
2.6.5 Failure To Make Triggering
Disclosures in Payday Loan
Advertisements
Regulation Z requires advertisements
for closed-end credit that contain
certain triggering terms, such as the
amount of any finance charge, to
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disclose additional terms.64 Required
additional advertising disclosures
include the annual percentage rate
(APR) and terms of repayment.65
Examiners observed that one or more
lenders failed to provide required
additional disclosures in advertisements
offering ‘‘free’’ loans to new customers.
An advertisement of the total cost of
consumer credit is an advertisement of
the dollar amount of a finance charge,66
a triggering term.67 Accordingly, the
entities were obligated to provide
additional advertising disclosures under
Regulation Z. In response to the
findings, one or more entities
implemented enhanced advertising
policies and procedures and oversight,
and ensured that all applicable
advertisements that contain triggering
terms include required Regulation Z
disclosures.
2.6.6 Not Actually Prepared To Offer
Advertised Loan Term
Regulation Z also requires an
advertisement for credit that states
specific credit terms to state only those
terms that actually are or will be
arranged or offered by the creditor.68
Examiners concluded that one or more
entities violated Regulation Z when they
advertised that a new customer’s first
payday loan would be free, even though
the lenders were not actually prepared
to offer the advertised term. Instead, the
entities offered consumers one free
week for loans lasting longer than one
week, that featured considerable APRs.
In response to the findings, one or more
entities implemented enhanced
advertising policies and procedures and
oversight, and, ceased advertising loan
terms that lenders were not actually
prepared to offer, including that a
consumer’s first loan would be free.
3. Supervision Program Developments
3.1 COVID–19 Related Information
and Guidance
3.1.1 Interagency Statement on
Pandemic Planning
On March 6, 2020, the Federal
Financial Institutions Examination
Council (FFIEC) on behalf of its member
agencies published updated guidance 69
identifying actions that financial
institutions should take to minimize the
potential adverse effects of a pandemic.
The statement noted that financial
64 12
CFR 1026.24(d)(1).
CFR 1026.24(d)(2)(ii) and (iii).
66 See 12 CFR 1026.4(a).
67 12 CFR 1026.24(d)(1)(iv).
68 12 CFR 1026.24(a).
69 The statement can be found at: https://
www.federalreserve.gov/supervisionreg/srletters/
SR2003a1.pdf.
65 12
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institutions should periodically review
related risk management plans,
including business continuity plans, to
ensure that they are able to continue to
deliver products and services in a wide
range of scenarios with minimal
disruption.
3.1.2 Joint Statement Encouraging
Responsible Small-Dollar Lending in
Response to COVID–19
On March 26, 2020, the Bureau along
with the Board of Governors of the
Federal Reserve Bank, the Federal
Deposit Insurance Corporation, the
National Credit Union Administration
and the Office of the Comptroller of
Currency (collective the Agencies)
issued a joint statement 70 that
encouraged banks, savings associations,
and credit unions to offer responsible
small-dollar loans to consumers and
small businesses in response to COVID–
19. The statement noted that loans
should be offered in a manner that
provides fair treatment of consumers,
complies with applicable laws and
regulations, and is consistent with safe
and sound practices. The joint statement
also encouraged lenders to work with
borrowers who may experience
unexpected circumstances and cannot
repay a loan as structured.
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3.1.3 CFPB Provides Flexibility During
COVID–19 Pandemic
On March 26, 2020, the Bureau
published three separate statements 71
noting its flexible approach during the
pandemic. The Bureau announced that
as of March 26, 2020, and until further
notice the Bureau does not intend to cite
in an examination or initiate an
enforcement action against an entity for
failure to submit to the Bureau:
D Quarterly submissions of HMDA
data;
D annual submissions concerning
agreements between credit card issuers
and institutions of higher education;
D quarterly submission of consumer
credit card agreements;
70 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
interagency-statement_small-dollar-lending-covid19_2020-03.pdf.
71 The three statements are: (1) Statement on
Supervisory and Enforcement Practices Regarding
Quarterly Reporting Under the Home Mortgage
Disclosure Act; (2) Statement on Supervisory and
Enforcement Practices Regarding Bureau
Information Collections for Credit Card and Prepaid
Account Issuers; and (3) Statement on Bureau
Supervisory and Enforcement Response to COVID–
19 Pandemic. The statements can be found at:
https://files.consumerfinance.gov/f/documents/
cfpb_hmda-statement_covid-19_2020-03.pdf,
https://files.consumerfinance.gov/f/documents/
cfpb_data-collection-statement_covid-19_202003.pdf, https://files.consumerfinance.gov/f/
documents/cfpb_supervisory-enforcementstatement_covid-19_2020-03.pdf.
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D collection of certain credit card
price and availability information; and
D submission of prepaid account
agreements and related information.
Entities should maintain records
sufficient to allow them to make
delayed submissions pursuant to future
Bureau guidance.
The Bureau also announced that it
will work with affected financial
institutions in scheduling examinations
and other supervisory activities to
minimize disruption and burden. When
conducting examinations and other
supervisory activities and in
determining whether to take
enforcement action, the Bureau will
consider the circumstances that entities
may face as a result of the COVID–19
pandemic and will be sensitive to goodfaith efforts demonstrably designed to
assist consumers.
3.1.4 Statement on Supervisory and
Enforcement Practices Regarding the
Fair Credit Reporting Act and
Regulation V in Light of the CARES Act
On April 1, 2020, the Bureau released
a statement,72 which outlined the
responsibilities of CRCs and furnishers
during the COVID–19 pandemic. The
statement noted that the CARES Act
requires lenders to report to CRCs that
a consumer is current on their loans if
the lender has provided the consumer
with payment relief in certain
circumstances. In addition, the Bureau
noted temporary and targeted flexibility
in its supervisory and enforcement
approach for lenders and CRCs facing
challenges as a result of the COVID–19
pandemic in the time they take to
investigate disputes. The Bureau stated
that it will consider a furnisher’s or
CRC’s individual circumstances and
does not intend to cite in an
examination or bring an enforcement
action against firms impacted by the
pandemic who exceed the deadlines to
investigate such disputes as long as they
make good faith efforts during the
pandemic to do so as quickly as
possible. The Bureau also released
FAQs on June 16, 2020, to help ensure
that consumers receive the credit
reporting protections required by the
CARES Act.73
72 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_creditreporting-policy-statement_cares-act_2020-04.pdf.
73 The FAQs can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_fcra_
consumer-reporting-faqs-covid-19_2020-06.pdf.
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3.1.5 Joint Statement on Supervisory
and Enforcement Practices Regarding
the Mortgage Servicing Rules in
Response to COVID–19 and the CARES
Act
On April 3, 2020, the Agencies and
the State financial regulators issued a
joint policy statement 74 providing
regulatory flexibility to enable mortgage
servicers to work with struggling
consumers affected by the COVID–19
emergency.75 The statement informs
servicers of the Agencies’ flexible
supervisory and enforcement approach
during the COVID–19 emergency
regarding certain communications to
consumers required by the mortgage
servicing rules.
The policy statement clarified that the
agencies do not intend to take
supervisory or enforcement action
against mortgage servicers for:
D Delays in sending certain early
intervention and loss mitigation notices
and taking certain related actions
required by the mortgage servicing
rules, provided that servicers are
making good faith efforts to provide
these notices and take these actions
within a reasonable time;
D failing to provide an
acknowledgement notice within five
days of receipt of an incomplete
application, where the borrower enters
certain short-term payment forbearance
programs or short-term repayment
plans, provided the servicer sends the
acknowledgment notice before the end
of the forbearance or repayment period;
and
D delays in sending annual escrow
statements, provided that servicers are
making good faith efforts to provide
these statements within a reasonable
time.
3.1.6 Interagency Statement on Loan
Modifications by Financial Institutions
Working With Customers Affected by
the Coronavirus
On April 7, 2020, the Agencies, in
consultation with State financial
regulators, issued an interagency
statement 76 encouraging financial
institutions to work constructively with
borrowers affected by COVID–19 and
providing additional information
74 The statement can be found at: https://
www.federalreserve.gov/newsevents/pressreleases/
files/bcreg20200403a1.pdf.
75 In conjunction with this statement, the Bureau
published, ‘‘Mortgage Servicing Rules FAQs Related
to the COVID–19 Emergency.’’ The FAQs can be
found at: https://files.consumerfinance.gov/f/
documents/cfpb_mortgage-servicing-rules-covid-19_
faqs.pdf.
76 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
interagency-statement_loan-modificationsreporting-covid-19_2020-04.pdf.
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regarding accounting and reporting
considerations for loan modifications.77
The statement encouraged financial
institutions to work with borrowers
impacted by the coronavirus and
promised not to criticize institutions for
doing so in a safe-and-sound manner. It
also highlighted that when working
with borrowers, lenders and servicers
should adhere to consumer protection
requirements, including fair lending
laws, to provide the opportunity for all
borrowers to benefit from these
arrangements. It stated that Agencies
will consider various facts and
circumstances when conducting
supervisory work evaluating compliance
during the relevant time period.
Additionally, it stated that the Agencies
do not expect to take a consumer
compliance public enforcement action
against an institution, provided that the
circumstances were related to the
national emergency and that the
institution made good faith efforts to
support borrowers and comply with the
consumer protection requirements, as
well as respond to any needed
corrective action.
3.1.7 Treatment of Pandemic Relief
Payments Under Regulation E and
Application of the Compulsory Use
Prohibition
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On April 13, 2020, the Bureau issued
an interpretive rule 78 to provide
guidance to government agencies
distributing aid to consumers in
response to the COVID–19 pandemic.
The Bureau concluded that certain
pandemic-relief payments are not
‘‘government benefits’’ for purposes of
Regulation E and EFTA and are
therefore not subject to the compulsory
use prohibition in EFTA, if certain
conditions are met.
Specifically, the Bureau interprets the
term ‘‘government benefit’’ to exclude
payments from Federal, State, or local
governments if those payments are
made:
1. To provide assistance to consumers
in response to the COVID–19 pandemic
or its economic impacts;
2. Outside of an already-established
government benefit program;
77 This statement replaces one previously issued
by the Agencies on March 22, 2020. The revised
statement clarifies the interaction between the
interagency statement issued on March 22, 2020,
and the temporary relief provided by section 4013
of the CARES Act.
78 The interpretative rule can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
interpretive-rule_pandemic-relief-payments-rege.pdf and at: https://www.federalregister.gov/
documents/2020/04/27/2020-08084/treatment-ofpandemic-relief-payments-under-regulation-e-andapplication-of-the-compulsory-use.
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3. On a one-time or otherwise limited
basis; and
4. Without a general requirement that
consumers apply to the agency to
receive funds.
3.1.8 Interagency Statement on
Appraisals and Evaluations for Real
Estate Related Transactions Affected by
the Coronavirus
On April 14, 2020, the Bureau,
together with the Agencies, issued an
interagency statement outlining
flexibilities in industry appraisal
standards and in appraisal regulations
and described temporary changes to
Fannie Mae and Freddie Mac appraisal
standards.
3.1.9 Compliance Bulletin and Policy
Guidance: Handling of Information and
Documents During Mortgage Servicing
Transfers (CFPB Bulletin 2020–02)
On April 24, 2020, the Bureau
published a Bulletin 79 to provide
mortgage servicers clarity, facilitate
compliance, and prevent harm to
consumers during the transfer of
residential mortgages.
Regulation X imposes specific
requirements on transferors and
transferees to prevent harm to
consumers resulting from servicing
transfers, including requiring transferee
servicers to maintain policies and
procedures that are reasonably designed
to ensure that the servicer can identify
necessary documents or information
that may not have been transferred by a
transferor servicer and obtain such
documents from the transferor servicer.
The Bulletin listed some examples of
servicer practices that the Bureau may
consider as contributing to policies and
procedures that are reasonably designed
to achieve the objectives of these
transfer requirements, including:
D Developing a servicing transfer plan
that includes a communications plan,
testing plan (for system conversion), a
timeline with key milestones and an
escalation plan for potential problems;
D Engaging in quality control work
after a transfer of preliminary data to
validate that the data on the transferee’s
system matches the data submitted by
the transferor;
D Conducting a post-transfer review
or debrief to determine effectiveness of
the transfer plan and whether any gaps
have arisen that require resolution;
D Monitoring consumer complaints
and loss mitigation performance
metrics; and
79 The bulletin can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
policy-guidance_mortgage-servicing-transfers_202004.pdf. The bulletin is also available in the Federal
Register at 85 FR 25281 (May 1, 2020).
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D Identifying any loans in default,
active foreclosure and bankruptcy or
any forbearance or other loss mitigation
agreements entered in with the
borrower.
The Bulletin also highlights the
importance of data quality. To that end,
it encourages servicers to adopt an
industry data standard for mortgage
records, called Mortgage Industry
Standards Maintenance Organization
standards.
The Bureau noted that it began
developing the Bulletin well before the
coronavirus pandemic, in consultation
with interagency and intergovernmental
partners. In light of the national
emergency declared on March 13, 2020,
the Bulletin sets forth that, if a servicing
transfer is requested or required by a
Federal regulator or by the security
issuer of ‘‘Government Loans’’ (as
defined in the CARES Act) during a
specified time frame, the Bureau will
take into consideration the challenges
facing mortgage servicers due to
COVID–19 and will focus any
supervisory feedback for institutions on
identifying issues, correcting
deficiencies, and ensuring appropriate
remediation for consumers.
3.1.10 CFPB Paves Way for Consumers
Facing Financial Emergencies To Obtain
Access to Mortgage Credit More Quickly
On April 29, 2020, the Bureau issued
an interpretive rule clarifying that
consumers can exercise their rights to
modify or waive certain required
waiting periods under the TILA–RESPA
Integrated Disclosure Rule and
Regulation Z rescission rules.80 The
Bureau also issued an FAQ document 81
that addresses when creditors must
provide appraisals or other written
valuations to mortgage applicants in
order to expedite access to credit for
consumers affected by the COVID–19
pandemic.
3.1.11 Amendments to the Remittance
Rule and Statement on Supervisory and
Enforcement Practices Regarding the
Remittance Rule in Light of the COVID–
19 Pandemic
On May 11, 2020, the Bureau issued
a final rule amending the remittance
rule.82 Among its requirements, the
remittance rule mandates that
remittance transfer providers generally
must disclose the exact exchange rate,
80 The interpretative rule can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_tilarespa-integrated-disclosure_rescission-pandemicinterpretive-rule.pdf.
81 The FAQs can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
mortgage-origination-rules_faqs-covid-19.pdf.
82 12 CFR 1005.30 et seq.
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the amount of certain fees, and the
amount expected to be delivered to the
recipient. The remittance rule also
allows for insured institutions to
estimate certain fees and exchange rate
information under certain
circumstances, but by statute, this
provision expires in July 2020.
The amendments in the May 2020
rule, which will become effective in July
of 2020, allow certain banks and credit
unions to continue to provide estimates
of the exchange rate and certain fees
under certain conditions. The
amendments also increase the safe
harbor threshold that determines
whether an entity makes remittance
transfers in the normal course of its
business and is subject to the rule.
Under the amendments, entities making
500 or fewer transfers annually in the
current and prior calendar years are not
subject to the rule.
In April, the Bureau announced that
it would take a flexible enforcement and
supervisory approach in light of the
expiration of the statutory temporary
exception and the challenges the
COVID–19 pandemic may cause insured
institutions as they prepare to
commence providing actual third-party
fee and exchange rate information as of
July 21, 2020.83
For international remittance transfers
that occur on or after July 21, 2020 and
before January 1, 2021, the Bureau will
neither cite supervisory violations nor
initiate enforcement actions against
insured institutions for continuing to
provide estimates to consumers under
the temporary exception, instead of
actual amounts.
3.1.12 Statement on Supervisory and
Enforcement Practices Regarding
Regulation Z Billing Error Resolution
Timeframes in Light of the COVID–19
Pandemic
On May 13, 2020, the Bureau issued
a statement informing creditors of the
Bureau’s flexible supervisory and
enforcement approach during the
pandemic regarding the timeframe
within which creditors complete their
investigations of consumers’ billing
error notices.84 Specifically, in
evaluating a creditor’s compliance with
the maximum timeframe for billing error
resolution set forth in Regulation Z, the
Bureau intends to consider the
creditor’s circumstances. The Bureau
83 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
policy-statement_remittances-covid-19_202004.pdf.
84 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
statement_regulation-z-error-resolution-covid-19_
2020-05.pdf.
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does not intend to cite a violation in an
examination or bring an enforcement
action against a creditor that takes
longer than required by the regulation to
resolve a billing error notice, so long as
the creditor has made good faith efforts
to obtain the necessary information and
make a determination as quickly as
possible, and complies with all other
requirements pending resolution of the
error.
3.1.13 CFPB, CSBS Issue Consumer
Guide on Mortgage Relief Options
On May 15, 2020, the Bureau and the
Conference of State Bank Supervisory
(CSBS) issued a guide to assist
homeowners with federally backed
loans through the process of obtaining
mortgage relief. The guide details
borrowers’ rights to mortgage payment
forbearance and foreclosure protection
under the CARES Act.85
3.1.14 Complaint Bulletin
On May 21, 2020, the Bureau issued
a consumer complaint Bulletin.86 The
bulletin shows that mortgage and credit
card complaints top the list of
complaints the Bureau has received that
mention coronavirus or related terms. In
April and May, the Bureau received
historically higher complaints, however,
complaints mentioning COVID-related
terms amounted to a total of 4,500
complaints during those two months.
Mortgage and credit card complaints
top the list for complaints that mention
coronavirus terms, with 22 percent and
19 percent of complaints, respectively.
Among mortgage complaints that
mention coronavirus keywords, 59
percent of consumers identified
struggling to pay the mortgage as the
issue. For credit card complaints, 19
percent of consumers identified a
problem with purchase shown or
statement as the issue.
The Bureau also received its highest
complaint volumes in its history in
March and April at 36,700 and 42,500,
respectively. In 2019, the monthly
average for complaints was 29,000. The
bulletin attributes the higher numbers to
factors such as market conditions and
more public awareness of the complaint
system.
3.1.15 Prioritized Assessments
The COVID–19 pandemic has
significantly impacted the financial
marketplace and has resulted in a
temporary shift in the Bureau’s
85 The guide can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_csbs_
consumers-forbearance-guide_2020-05.pdf.
86 The complaint bulletin can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
complaint-bulletin_coronavirus-complaints.pdf.
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supervisory work. In late May, the
Bureau rescheduled some of its planned
examination work and instead began
conducting Prioritized Assessments
(PAs). PAs are higher-level inquiries
than traditional examinations, designed
to obtain real-time information from
entities that operate in markets posing
elevated risk of consumer harm due to
pandemic-related issues. In July of 2020,
the Bureau released Prioritized
Assessments FAQs.87
3.1.16 Statement on Supervisory and
Enforcement Practices Regarding
Electronic Credit Card Disclosures in
Light of COVID–19 Pandemic
On June 3, 2020, the Bureau issued a
statement 88 indicating that it will take
a flexible supervisory and enforcement
approach during the pandemic
regarding card issuers’ electronic
provision of disclosures required to be
in writing for account-opening
disclosures and temporary rate or fee
reduction disclosures mandated under
the provisions governing non-home
secured, open-end credit in Regulation
Z. Specifically, this statement pertains
to oral telephone interactions where a
card issuer may seek to open a new
credit card account for a consumer, to
provide certain temporary reductions in
APRs or fees applicable to an existing
account, or to offer a low-rate balance
transfer. In these instances, the Bureau
does not intend to cite a violation in an
examination or bring an enforcement
action against an issuer that during a
phone call does not obtain a consumer’s
E-Sign consent to electronic provision of
the written disclosures required by
Regulation Z, so long as the issuer
during the phone call obtains both the
consumer’s oral consent to electronic
delivery of the written disclosures and
oral affirmation of his or her ability to
access and review the electronic written
disclosures.
3.1.17 CFPB and State Regulators
Provide Additional Guidance To Assist
Borrowers Impacted by the COVID–19
Pandemic
On June 4, 2020, the Bureau and
CSBS issued joint guidance to mortgage
servicers to assist in complying with the
CARES Act.89 Servicers of federallybacked mortgages, such as Fannie Mae
or Freddie Mac, Department of Housing
87 The FAQs can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
prioritized-assessment_frequently-askedquestions.pdf.
88 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_esign-credit-card_statement_2020-06.pdf.
89 The guidance can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_csbs_
industry-forbearance-guide_2020-06.pdf.
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and Urban Development, Department of
Veterans Affairs, or Department of
Agriculture loans, must grant
forbearance to borrowers with
pandemic-related hardships that may
last as long as two consecutive 180-day
periods. Furthermore, additional
interest, fees, or penalties beyond the
amounts scheduled or calculated should
be waived with no negative impact to
the borrower’s mortgage contract during
the forbearance.
Mortgage servicers could violate the
CARES Act or other applicable law and
potentially cause consumer harm if they
were to require documentation from
borrowers to prove financial hardship, if
they did not grant the forbearance once
properly requested, or if they steered
borrowers away from forbearance or
misled them.
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3.1.18 CFPB Issues Interim Final Rule
on Loss Mitigation Options for
Homeowners Recovering From
Pandemic-Related Financial Hardships
On June 23, 2020, the Bureau issued
an interim final rule (IFR) 90 that will
make it easier for consumers to
transition out of financial hardship
caused by the COVID–19 pandemic and
easier for mortgage servicers to assist
those consumers.
The CARES Act provides forbearance
relief for consumers with federallybacked mortgage loans. The mortgage
industry has developed different
options for borrowers to repay the
payments that were forborne under the
CARES Act. For example, the Federal
Housing Finance Agency, Fannie Mae
and Freddie Mac may permit some
borrowers to defer repayment of the
forborne amounts until the end of the
mortgage loan. The Federal Housing
Administration (FHA) has a similar
program. These programs require the
servicer to collect only minimal
information from the borrower before
offering the option.
The IFR makes it clear that servicers
do not violate Regulation X by offering
certain COVID–19-related loss
mitigation options based on an
evaluation of limited application
information collected from the
borrower. Normally, with certain
exceptions, Regulation X would require
servicers to collect a complete loss
mitigation application before making an
offer. The IFR specifies that the loss
mitigation option must meet certain
criteria to qualify for an exception from
the typical requirement to collect a
90 The IFR can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
interim-final-rule_respa_covid-19-related-lossmitigation-options.pdf.
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complete application. Among other
things, the option must allow the
borrower to delay paying all principal
and interest payments that were
forborne or became delinquent as a
result of a financial hardship due,
directly or indirectly, to the COVID–19
emergency. Servicers may not charge
any fees to borrowers in connection
with the option, and the borrower’s
acceptance ends any preexisting
delinquency. The exception is not
limited to payments forborne under the
CARES Act.
The IFR also provides servicers relief
from certain requirements under
Regulation X that normally would apply
after a borrower submits an incomplete
loss mitigation application. Once the
borrower accepts an offer for an eligible
program under the IFR, the servicer
need not exercise reasonable diligence
to obtain a complete application and
need not provide the acknowledgment
notice that is generally required under
Regulation X when a borrower submits
a loss mitigation application.
Servicers still must comply with
Regulation X’s other requirements after
a borrower accepts a loss mitigation
offer. For example, if the borrower
becomes delinquent again after
accepting the offer, the servicer would
have to satisfy Regulation X’s early
intervention requirements. Similarly, if
the servicer receives a new loss
mitigation application from the
borrower, the servicer would have to
comply with Regulation X’s loss
mitigation procedures.
clearly the nexus between cited facts
and the Bureau’s legal analysis.
D Seek monetary relief for
abusiveness only when there has been a
lack of a good-faith effort to comply
with the law, except the Bureau will
continue to seek legal or equitable
remedies, such as damages and
restitution for injured consumers
regardless of whether a company acted
in good faith or bad faith.
3.2.2 Responsible Business Conduct:
Self-Assessing, Self-Reporting,
Remediating, and Cooperation (CFPB
Bulletin 2020–01)
In 2013, the Bureau issued a Bulletin
that identified several activities that
businesses may engage in that could
prevent and minimize harm to
consumers, referring to these activities
as ‘‘responsible conduct.’’ On March 6,
2020, the Bureau issued an updated
Bulletin 92 to clarify its approach to
responsible conduct and to reiterate the
importance of such conduct. The
Bulletin noted that the Bureau
principally considers four categories of
conduct when evaluating whether some
form of credit is warranted in an
enforcement investigation or
supervisory matter: Self-assessing, selfreporting, remediating, and cooperating.
However, if an entity engages in another
type of activity particular to its situation
that is both substantial and meaningful,
the Bureau may take that activity into
consideration as well.
3.2.1 Statement of Policy Regarding
Prohibition on Abusive Acts or Practices
On January 24, 2020, the Bureau
issued a policy statement 91 providing a
framework on how it intends to apply
the ‘‘abusiveness’’ standard in
supervision and enforcement matters.
Through this policy statement, the
Bureau provided clarification on how it
intends to apply abusiveness in order to
promote compliance and certainty. In its
supervision and enforcement work, the
Bureau intends to:
D Focus on citing or challenging
conduct as abusive in supervision and
enforcement matters only when the
harm to consumers outweighs the
benefit.
D Generally, avoid ‘‘dual pleading’’ of
abusiveness and unfairness or deception
violations arising from all or nearly all
the same facts, and allege ‘‘stand alone’’
abusiveness violations that demonstrate
3.2.3 Innovation Updates
On May 22, 2020, the Bureau
announced that it issued two No-Action
Letter (NAL) Templates under its
innovation policies. To encourage
innovation, last year the Bureau
introduced an improved NAL Policy
that includes, among other things, a
more streamlined review process
focusing on the consumer benefits and
risks of the applicant’s product or
service. NALs provide increased
regulatory certainty through a statement
that the Bureau will not bring a
supervisory or enforcement action
against a company for providing a
product or service under certain facts
and circumstances. The improved
Policy also includes an innovative
provision concerning NAL templates,
which permits entities such as service
providers and trade associations to
secure a template that can serve as the
foundation for NAL applications from
companies that provide consumer
financial products and services.
91 The statement can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
abusiveness-enforcement-policy_statement.pdf.
92 The Bulletin can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
bulletin-2020-01_responsible-business-conduct.pdf.
3.2
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Specifically, NAL templates include
(among other things) a non-binding
statement of the Bureau’s intent to grant
NAL applications based on it.
Using the first NAL Template,
requested by Brace Software, Inc.
(Brace), mortgage servicers seeking to
assist struggling borrowers would be
able to apply for NALs in connection
with the use of Brace’s online platform
to implement loss-mitigation efforts for
those borrowers.93 As described in
Brace’s application, the platform is an
online version of the Fannie Mae Form
710, which is the loss mitigation
application used by most mortgage
servicers. While the Bureau does not
endorse particular products or
providers, the Bureau observes that
digitizing the loss mitigation application
process has the potential to improve a
process that is experiencing an increase
in loss mitigation requests from
consumers due to the COVID–19
pandemic.
The Bureau also approved a NAL
template that insured depository
institutions intending to offer the
standardized, small-dollar credit
product described therein can use to
support applications for the issuance of
individual NALs.94 The NAL template
contemplates that NALs based on it will
include certain important protections
for consumers who seek the covered
small-dollar loan products.
3.2.4 Bureau Launches Pilot Advisory
Opinion Program To Provide Regulated
Entities Clear Guidance and Improve
Compliance
On June 18, 2020, the Bureau
launched a pilot advisory opinion (AO)
program 95 to publicly address
regulatory uncertainty in the Bureau’s
existing regulations. The pilot AO
program will allow entities seeking to
comply with regulatory requirements to
submit a request where uncertainty
exists. The Bureau will then select
topics based on the program’s priorities
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93 Brace’s
application can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
brace_no-action-letter-request.pdf. The Brace NAL
Template can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
brace_no-action-letter.pdf.
94 The Bank Policy Institute (the BPI) application
can be found at: https://files.consumerfinance.gov/
f/documents/cfpb_bpi_no-action-letter-request.pdf.
The BPI NAL Template can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_bpi_
no-action-letter.pdf.
95 More information about the AO program can be
found at: https://files.consumerfinance.gov/f/
documents/cfpb_advisory-opinions-pilot_frnotice.pdf, https://files.consumerfinance.gov/f/
documents/cfpb_advisory-opinions-proposal_frnotice.pdf.
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and make the responses available to the
public.
The pilot program will focus on four
key priorities:
D Consumers are provided with
timely and understandable information
to make responsible decisions.
D Identify outdated, unnecessary or
unduly burdensome regulations in order
to reduce regulatory burdens.
D Consistency in enforcement of
Federal consumer financial law in order
to promote fair competition.
D Ensuring markets for consumer
financial products and services operate
transparently and efficiently to facilitate
access and innovation.
Additionally, initial factors weighing
for the appropriateness of an AO
include: That the interpretive issue has
been noted during prior Bureau
examinations as one that might benefit
from additional regulatory clarity; that
the issue is one of substantive
importance or impact or one whose
clarification would provide significant
benefit; and/or that the issue concerns
an ambiguity that the Bureau has not
previously addressed through an
interpretive rule or other authoritative
source. There will be a strong
presumption against appropriateness of
an AO for issues that are the subject of
an ongoing investigation or enforcement
action or the subject of an ongoing or
planned rulemaking.
If deemed appropriate, the Bureau
will issue an advisory opinion based on
its summary of the facts presented that
would be applicable to other entities in
situations with similar facts and
circumstances. The advisory opinions
would be posted on the Bureau’s
website and published in the Federal
Register.
In addition to the pilot, the Bureau
also announced that the public can
comment on the proposed AO program.
Following the conclusion of the pilot,
the proposed AO program will be fully
implemented after the Bureau’s review
of comments received.
3.2.5 CFPB Issues Interpretative Rule
on Method for Determining
Underserved Areas
On June 23, 2020, the Bureau issued
an interpretive rule 96 with respect to
how the Bureau determines which
counties qualify as ‘‘underserved’’ for a
given calendar year under Regulation Z.
The Bureau’s annual list of rural and
underserved counties and areas is used
in applying various provisions under
96 The interpretative rule can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
interpretive-rule_determining-underserved-areasusing-hmda-data.pdf.
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Regulation Z, which implements the
Truth in Lending Act (TILA). These
provisions include the exemption from
the requirement to establish an escrow
account for a higher-priced mortgage
loan and the ability to originate balloonpayment qualified mortgages and
balloon-payment high cost mortgages.
Regulation Z states that an area is
‘‘underserved’’ during a calendar year if,
according to HMDA data for the
preceding calendar year, it is a county
in which no more than two creditors
extended covered transactions secured
by first liens on properties in the county
five or more times. The Bureau
previously interpreted how HMDA data
would be used to determine which areas
meet this standard using a method set
forth in the commentary to Regulation
Z. However, portions of this method
have become obsolete because they rely
on data elements that were modified or
eliminated by certain 2015 amendments
to the Bureau’s HMDA regulations,
which became effective in 2018.
The interpretive rule describes the
HMDA data that will instead be used in
determining that an area is
‘‘underserved’’ for purposes of the
standard described in Regulation Z.
This interpretation supersedes the
outdated methodology set forth in the
commentary to Regulation Z.
4. Remedial Actions
4.1 Public Enforcement Actions
The Bureau’s supervisory activities
resulted in or supported the following
public enforcement actions.
4.1.1 Citizens Bank, N.A.
On January 30, 2020, the Bureau filed
suit against Citizens Bank, N.A.
(Citizens), a national banking
association headquartered in
Providence, Rhode Island. The Bureau’s
complaint 97 alleges violations of TILA
and TILA’s implementing Regulation Z,
including violations of amendments to
TILA contained in the Fair Credit
Billing Act (FCBA) and the Credit Card
Accountability Responsibility and
Disclosure Act (CARD Act).
As described in the complaint, the
Bureau alleges that for several years
Citizens violated TILA, as amended by
the FCBA, and Regulation Z by failing
to properly manage and respond to
credit card disputes. The complaint
alleges that Citizens automatically
denied consumers’ billing error notices
and claims of unauthorized use in
certain circumstances. The complaint
further alleges that Citizens failed to
97 The complaint can be found at: https://
files.consumerfinance.gov/f/documents/cfpb_
citizens-bank_complaint_2020-01.pdf.
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fully refund finance charges and fees
when consumers asserted meritorious
disputes or fraud claims and failed to
send consumers required
acknowledgement letters and denial
notices in response to billing error
notices.
The Bureau further alleges that for
several years Citizens violated TILA by
violating provisions passed under the
CARD Act. The Bureau alleges that
Citizens violated TILA and Regulation Z
by failing to provide credit counseling
referrals to consumers who called
Citizens’ toll-free number designated for
that purpose. These alleged violations of
TILA—including those under the FCBA
and the CARD Act—and Regulation Z
also constitute violations of the
Consumer Financial Protection Act.
The Bureau’s complaint seeks, among
other remedies, an injunction against
defendants and the imposition of civil
money penalties.
5. Signing Authority
The Director of the Bureau, having
reviewed and approved this document,
is delegating the authority to
electronically sign this document to
Laura Galban, a Bureau Federal Register
Liaison, for purposes of publication in
the Federal Register.
Dated: September 4, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer
Financial Protection.
[FR Doc. 2020–19978 Filed 9–9–20; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
[Docket Number DARS–2020–0022; OMB
Control Number 0704–0386]
Information Collection Requirement;
Defense Federal Acquisition
Regulation Supplement; Small
Business Programs
Defense Acquisition
Regulations System; Department of
Defense (DoD).
ACTION: Notice and request for
comments regarding a proposed
extension of an approved information
collection requirement.
khammond on DSKJM1Z7X2PROD with NOTICES
AGENCY:
In compliance with section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995, DoD announces
the proposed extension of a public
information collection requirement and
seeks public comment on the provisions
thereof. DoD invites comments on:
SUMMARY:
VerDate Sep<11>2014
16:38 Sep 09, 2020
Jkt 250001
Whether the proposed collection of
information is necessary for the proper
performance of the functions of DoD,
including whether the information will
have practical utility; the accuracy of
the estimate of the burden of the
information collection on respondents,
including the use of automated
collection techniques or other forms of
information technology. The Office of
Management and Budget (OMB) has
approved this information collection
requirement under Control Number
0704–0386 through November 30, 2020.
DoD proposes that OMB extend its
approval for an additional three years.
DATES: DoD will consider all comments
received by November 9, 2020.
ADDRESSES: You may submit comments,
identified by OMB Control Number
0704–0386, using any of the following
methods:
Æ Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
Æ Email: osd.dfars@mail.mil. Include
OMB Control Number 0704–0386 in the
subject line of the message.
Æ Fax: 571–372–6094.
Æ Mail: Defense Acquisition
Regulations System, Attn: Ms. Jennifer
Johnson, OUSD(A&S)DPC/DARS, 3060
Defense Pentagon, Room 3B938,
Washington, DC 20301–3060.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms.
Jennifer Johnson, at 571–372–6100.
SUPPLEMENTARY INFORMATION:
Title and OMB Number: Defense
Federal Acquisition Regulation
Supplement (DFARS), Small Business
Programs; OMB Control Number 0704–
0386.
Type of Request: Extension.
Affected Public: Businesses or other
for-profit and not-for-profit institutions.
Respondent’s Obligation: Required to
obtain or retain benefits.
Respondents: 41.
Responses per Respondent: 1.
Annual Responses: 41.
Hours per Response: 1.
Estimated Hours: 41.
Reporting Frequency: On occasion.
Needs and Uses: DoD uses this
information to improve administration
under the small business subcontracting
program and to evaluate a contractor’s
past performance in complying with its
subcontracting plan.
The clause at DFARS 252.219–7003,
Small Business Subcontracting Plan
(DoD Contracts), is prescribed for use in
solicitations and contracts that include
the clause at FAR 52.219–9, Small
PO 00000
Frm 00029
Fmt 4703
Sfmt 4703
Business Subcontracting Plan.
Paragraph (e) of the clause requires the
contractor to notify the contracting
officer, in writing, of any substitutions
of firms that are not small business
firms, for the small business firms
specifically identified in the
subcontracting plan. The notification is
necessary when (1) a prime contractor
has identified specific small business
concerns in its subcontracting plan, and
(2) after contract award, substitutes one
of the small businesses identified in its
subcontracting plan with a firm that is
not a small business. The intent of this
information collection is to alert the
contracting officer of this situation.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense
Acquisition Regulations System.
[FR Doc. 2020–19981 Filed 9–9–20; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
[Docket Number DARS–2020–0023; OMB
Control Number 0704–0446]
Information Collection Requirement;
Defense Federal Acquisition
Regulation Supplement (DFARS);
Evaluation Factor for Use of Members
of the Armed Forces Selected Reserve
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Notice and request for
comments regarding a proposed
extension of an approved information
collection requirement.
AGENCY:
In compliance with section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995, DoD announces
the proposed revision of a public
information collection requirement and
seeks public comment on the provisions
thereof. DoD invites comments on:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of DoD,
including whether the information will
have practical utility; the accuracy of
the estimate of the burden of the
proposed information collection; ways
to enhance the quality, utility, and
clarity of the information to be
collected; and ways to minimize the
burden of the information collection on
respondents, including the use of
automated collection techniques or
other forms of information technology.
The Office of Management and Budget
(OMB) has approved this information
collection for use through November 30,
SUMMARY:
E:\FR\FM\10SEN1.SGM
10SEN1
Agencies
[Federal Register Volume 85, Number 176 (Thursday, September 10, 2020)]
[Notices]
[Pages 55828-55840]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19978]
=======================================================================
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
Supervisory Highlights, Issue 22 (Summer 2020)
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Supervisory Highlights.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing its twenty second edition of Supervisory Highlights. In this
issue of Supervisory Highlights, we report examination findings in the
areas of consumer reporting, debt collection, deposits, fair lending,
and mortgage servicing that were completed between September 2019 and
December 2019. The report does not impose any new or different
[[Page 55829]]
legal requirements, and all violations described in the report are
based only on those specific facts and circumstances noted during those
examinations.
DATES: The Bureau released this edition of the Supervisory Highlights
on its website on September 4, 2020.
FOR FURTHER INFORMATION CONTACT: Jaclyn Sellers, Counsel, at (202) 435-
7449. If you require this document in an alternative electronic format,
please contact [email protected].
SUPPLEMENTARY INFORMATION:
1. Introduction
The Consumer Financial Protection Bureau (Bureau) is committed to a
consumer financial marketplace that is free, innovative, competitive,
and transparent, where the rights of all parties are protected by the
rule of law, and where consumers are free to choose the products and
services that best fit their individual needs. To effectively
accomplish this, the Bureau remains committed to sharing with the
public key findings from its supervisory work to help industry limit
risks to consumers and comply with Federal consumer financial law.
The findings included in this report cover examinations in the
areas of consumer reporting, debt collection, deposits, fair lending,
and mortgage servicing that were completed between September 2019 and
December 2019.\1\
---------------------------------------------------------------------------
\1\ This time frame refers to the Supervisory Observations
section only.
---------------------------------------------------------------------------
It is important to keep in mind that institutions are subject only
to the requirements of relevant laws and regulations. The information
contained in Supervisory Highlights is disseminated to help
institutions better understand how the Bureau examines institutions for
compliance with those requirements. This document does not impose any
new or different legal requirements. In addition, the legal violations
described in this and previous issues of Supervisory Highlights are
based on the particular facts and circumstances reviewed by the Bureau
as part of its examinations. A conclusion that a legal violation exists
on the facts and circumstances described here may not lead to such a
finding under different facts and circumstances.
We invite readers with questions or comments about the findings and
legal analysis reported in Supervisory Highlights to contact us at
[email protected].
2. Supervisory Observations
Recent supervisory observations are reported in the areas of
consumer reporting, debt collection, deposits, fair lending, and
mortgage servicing.
2.1 Consumer Reporting
Entities that obtain or use consumer reports from consumer
reporting companies (CRCs),\2\ or that furnish information to CRCs for
inclusion in consumer reports, play a vital role in the consumer
reporting process. They are subject to several requirements under the
Fair Credit Reporting Act (FCRA) \3\ and its implementing regulation,
Regulation V,\4\ including the requirement to only obtain or use
reports for a permissible purpose, and to furnish data subject to the
relevant accuracy and dispute handling requirements. In one or more
recent furnishing reviews, examiners found deficiencies in user and
furnisher compliance with FCRA permissible purpose, accuracy, and
dispute investigation requirements.
---------------------------------------------------------------------------
\2\ The term ``consumer reporting company'' means the same as
``consumer reporting agency,'' as defined in the Fair Credit
Reporting Act, 15 U.S.C. 1681a(f), including nationwide consumer
reporting agencies as defined in 15 U.S.C. 1681a(p) and nationwide
specialty consumer reporting agencies as defined in 15 U.S.C.
1681a(x).
\3\ 15 U.S.C. 1681 et seq.
\4\ 12 CFR part 1022.
---------------------------------------------------------------------------
2.1.1 Prohibition Against Using or Obtaining Consumer Reports Without a
Permissible Purpose
The FCRA prohibits a person from using or obtaining a consumer
report unless the consumer report is obtained for a purpose authorized
by the FCRA.\5\ This prohibition protects the privacy of consumers and
prevents the potential negative impact of certain inquiries. Examiners
found that one or more lenders obtained consumers' credit reports
without a permissible purpose. In reviewing files for compliance with
permissible purpose requirements, examiners found that the lenders'
employees obtained consumers' credit reports from a CRC without first
establishing that the lenders had a permissible purpose to obtain the
report under the FCRA. After identification of these issues, one or
more lenders revised permissible purpose policies, procedures, and
training materials. While consumer consent is not required by the FCRA
when a lender has another permissible purpose to obtain the consumer's
report, one or more mortgage lenders decided to require that the
lender's employees document consumer consent prior to obtaining the
consumers' credit reports, as an additional precaution to ensure that
the lender had a permissible purpose to obtain the consumers' reports.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 1681b(f).
---------------------------------------------------------------------------
2.1.2 Furnisher Duty To Provide Notice of Delinquency of Accounts
The FCRA requires furnishers of information regarding delinquent
accounts to report the date of delinquency to the CRC within 90
days.\6\ The FCRA specifies that the date of first delinquency reported
by the furnisher ``shall be the month and year of the commencement of
the delinquency on the account that immediately preceded the action.''
\7\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 1681s-2(a)(5)(A). This provision applies to
accounts being placed for collection, charged to profit or loss, or
subjected to similar action.
\7\ Id.
---------------------------------------------------------------------------
In one or more examinations of third-party debt collection
furnishers, examiners found that the furnishers failed to establish and
follow reasonable procedures to obtain the actual date of first
delinquency from their clients. Instead, they furnished a date they
knew or had reason to believe was an incorrect date of first
delinquency. The third-party debt collection furnishers were furnishing
information about cable, satellite, and telecommunications accounts.
The furnishers reported, as the date of first delinquency, the date
that the consumer's service was disconnected, despite
telecommunications companies routinely disconnecting service several
months after the first missed payment that commenced the delinquency.
In addition, in one or more examinations of third-party debt collection
furnishers, examiners found the furnisher provided the charge-off date
as the date of first delinquency, which is often several months after
the commencement of delinquency. Subsequent to these findings, one or
more furnishers ceased operations.
2.1.3 Duty To Conduct Reasonable Investigation of Disputes
For disputes filed directly with furnishers, Regulation V requires
furnishers to conduct a reasonable investigation with respect to the
disputed information and review all relevant information provided by
the consumer with the dispute notice.\8\ Similarly, for indirect
disputes filed with CRCs, the FCRA requires that, upon receiving notice
of the dispute from the CRC, the furnisher must conduct an
investigation with respect to the disputed information and review all
relevant information provided by the
[[Page 55830]]
CRC.\9\ In one or more examinations, examiners found that, for both
direct and indirect disputes, the furnishers failed to review
underlying account information and documentation, account history
notes, or dispute-related correspondence provided by the consumer to
assess what reasonable investigative steps would be necessary.
Inadequate staffing and high daily dispute resolution requirements
contributed to the furnishers' failure to conduct reasonable
investigations. As with the findings described above in section 2.1.2,
subsequent to these findings, one or more furnishers ceased operations.
---------------------------------------------------------------------------
\8\ 12 CFR 1022.43(e)(1-2).
\9\ 15 U.S.C. 1681s-2(b)(1)(A)-(B).
---------------------------------------------------------------------------
2.2 Debt Collection
The Bureau has the supervisory authority to examine certain
entities that engage in consumer debt collection activities, including
nonbanks that are larger participants in the consumer debt collection
market.\10\ Recent examinations of larger participant debt collectors
identified one or more violations of the Fair Debt Collection Practices
Act (FDCPA).
---------------------------------------------------------------------------
\10\ 12 CFR 1090.
---------------------------------------------------------------------------
2.2.1 False Litigation Threats and Misrepresentations Regarding
Litigation
Section 807(5) of the FDCPA prohibits ``[t]he threat to take any
action that cannot legally be taken or that is not intended to be
taken.'' \11\ Section 807(10) prohibits ``[t]he use of any false
representation or deceptive means to collect or attempt to collect any
debt . . . .'' \12\ Examiners found that one or more debt collectors
falsely threatened consumers with lawsuits that the collectors could
not legally file or did not intend to file, in violation of section
807(5). Examiners also determined that one or more debt collectors made
false representations regarding the litigation process and a consumer's
obligations in the event of litigation, in violation of section
807(10). In response to these findings, the debt collectors are making
changes to their training, scripts, monitoring, and other compliance
processes.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 1692e(5).
\12\ 15 U.S.C. 1692e(10).
---------------------------------------------------------------------------
2.2.2 False Implication That Debt Could Be Reported to CRCs
Section 807(10) of the FDCPA prohibits ``[t]he use of any false
representation or deceptive means to collect or attempt to collect any
debt . . . .'' \13\ Examiners observed that one or more debt collectors
made implied representations to consumers that they would report their
debts to CRCs \14\ if they were not paid by a certain date. The debt
collectors did not report debts to CRCs for the relevant clients.
Examiners concluded that the debt collectors' statements were false
representations that violated section 807(10). In response to these
findings, the debt collectors are making changes to their training and
monitoring.
---------------------------------------------------------------------------
\13\ Id.
\14\ As noted above in Footnote 2, the term ``consumer reporting
company'' means the same as ``consumer reporting agency,'' as
defined in the FCRA, 15 U.S.C. 1681a(f).
---------------------------------------------------------------------------
2.2.3 False Representation That Debt Collector Is a CRC
Section 807(16) of the FDCPA prohibits ``[t]he false representation
or implication that a debt collector operates or is employed by a
consumer reporting agency . . . .'' \15\ Examiners observed that one or
more debt collectors falsely represented or implied to consumers that
they operated or were employed by CRCs in violation of section 807(16).
In response to these findings, the debt collectors are making changes
to their training and monitoring.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 1692e(16).
---------------------------------------------------------------------------
2.3 Deposits
The CFPB continues to examine banks for compliance with Regulation
E,\16\ which implements the Electronic Fund Transfer Act (EFTA). EFTA
establishes a legal framework for the offering and use of electronic
fund transfer services and remittance transfer services.\17\ The CFPB
also continues to review the deposits operations of the entities under
its supervisory authority for compliance with relevant statutes and
regulations, including Regulation DD,\18\ which implements the Truth in
Savings Act.\19\
---------------------------------------------------------------------------
\16\ 12 CFR 1005.
\17\ 12 U.S.C. 1693.
\18\ 12 CFR 1030.
\19\ Id.
---------------------------------------------------------------------------
2.3.1 Waivers of Consumers' Error Resolution and Stop Payment Rights
and Financial Institutions' Liability
EFTA states that ``no writing or other agreement between a consumer
and any other person may contain any provision which constitutes a
waiver of any right conferred or cause of action created by this
subchapter.'' \20\ EFTA and Regulation E state that consumers have a
right to have their claims of error investigated if their notice of
error meets certain criteria.\21\ As described below, the criteria does
not include agreeing to ``cooperate'' with the financial institution's
error investigation. EFTA and Regulation E together establish that
consumers have a right to have a financial institution investigate
their error subject only to the requirements set forth in EFTA and
Regulation E.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 1693l.
\21\ 15 U.S.C. 1693f and 12 CFR 1005.11(b)(1).
---------------------------------------------------------------------------
Examiners found that one or more financial institutions required
consumers to sign deposit account agreements that stated that the
consumers would ``cooperate'' with the institution's investigation of
any errors filed by the consumer. The ``cooperation'' included
providing affidavits and notifying law enforcement authorities. By
requiring consumers to ``cooperate'' with Regulation E error
investigations and provide information beyond that which is required in
EFTA and Regulation E, the financial institutions' agreements contained
provisions that waived consumers' rights in violation of EFTA.
EFTA and Regulation E also provide consumers with rights to stop
preauthorized payments.\22\ Under EFTA, consumers have the right to
stop payment, subject only to those limitations set forth in EFTA and
Regulation E.\23\ Regulation E contains a comprehensive list of actions
consumers must take in order to make an effective request to stop
payment.\24\ The list does not include agreeing to indemnify and hold
the financial institution harmless for costs that may arise from
honoring the valid stop payment request or agreeing not to hold the
institution liable if it is unable to stop payment due to inadvertence,
accident, or oversight.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 1693e and 12 CFR 1005.10(c).
\23\ 15 U.S.C. 1693e and 1693l and 12 CFR 1005.10(c)(1).
\24\ 12 CFR 1005.10(c)(1).
---------------------------------------------------------------------------
Examiners found that one or more financial institutions required
consumers to sign stop payment request forms and deposit agreements in
which the consumers agreed to indemnify and hold the institutions
harmless for various claims and expenses arising from the institutions
honoring stop payment requests. This included not holding the financial
institutions liable if they were unable to stop the payment due to
inadvertence, accident, or oversight. As this language requires more of
consumers than EFTA and Regulation E allow, the stop payment forms and
deposit agreements impermissibly waived consumers' rights in violation
of, and waived the institutions' liability under, EFTA and Regulation E
for certain failures to stop payment.\25\
---------------------------------------------------------------------------
\25\ 15 U.S.C. 1693h and 1693l.
---------------------------------------------------------------------------
In response to the examiners' findings, the financial institutions
[[Page 55831]]
revised their deposit agreements and stop payment forms to ensure they
do not contain any waivers of rights in violation of EFTA.
2.3.2 Reliance on Incorrect Date To Assess Timeliness of EFT Error
Notice
Regulation E requires that financial institutions comply with
specific requirements with respect to qualifying oral or written
notices of an EFT error. With respect to timing, EFTA and Regulation E
require that the oral or written notice must be received by the
institution ``no later than 60 days after the institution sends the
periodic statement . . . on which the alleged error is first
reflected.'' \26\
---------------------------------------------------------------------------
\26\ 12 CFR 1005.11(b)(1)(i).
---------------------------------------------------------------------------
Examiners found that one or more financial institutions required
that EFT notice errors relating to ACH transactions be received within
60 days of the date of the transactions. For claims received after 60
days from the date of the transaction, the institutions treated the
error notice as late, and would request permission from the merchant's
bank to reverse the charges.
The financial institutions revised their policies on EFT error
notice processing to comply with the Regulation E timing requirements.
2.3.3 Violation of Error Results Notice Requirements
Both section 908(a) of EFTA and Regulation E require a financial
institution investigating an alleged EFT error to communicate to
consumers, among other elements, (1) the investigation determination;
and (2) an explanation of the determination when it determines that no
error or a different error occurred within its report of results.\27\
---------------------------------------------------------------------------
\27\ 12 U.S.C. 1693f(a) and 1693f(d) and 12 CFR 1005.11(d)(1).
---------------------------------------------------------------------------
To give purpose to both obligations, the meaning of an
``explanation'' is not synonymous with that of a ``determination.''
Financial institutions must go beyond just providing the findings to
actually explain or give the reasons for or cause of those findings.
Examiners found that one or more financial institutions violated
Regulation E by failing to provide an explanation of its findings
within the report of results. In addition, examiners found that one or
more financial institutions violated Regulation E by providing an
inaccurate or irrelevant response to the consumer when it determined
that no error or a different error occurred.\28\
---------------------------------------------------------------------------
\28\ Id.
---------------------------------------------------------------------------
Regulation E also requires financial institutions to note, in the
report of results, the consumer's right to request the documents that
the institution relied on in making its determination when the
institution determines no error or a different error occurred.\29\
Examiners found that one or more financial institutions' reports of
results letters sent to consumers after determining that no error or a
different error occurred, were missing the required notice of the
consumer's right to request the documents that the institution relied
on in making its determination, as required by Regulation E.\30\
---------------------------------------------------------------------------
\29\ Id.
\30\ Id.
---------------------------------------------------------------------------
In response to the examiners' findings, the financial institutions
undertook a revision of its report of results templates used when the
financial institutions determine no error or different error occurred
to ensure that the letter provides: (a) The determination; (b) an
explanation of the financial institution's findings; and, (c) a
statement noting the consumer's right to request the documents that the
financial institutions relied on in making its determination, as
required by Regulation E.\31\
---------------------------------------------------------------------------
\31\ Id.
---------------------------------------------------------------------------
2.3.4 Failure To Fulfill Advertised Bonus Offer
Regulation DD requires that advertisements of deposit accounts not
mislead, be inaccurate, or misrepresent the financial institution's
deposit contract.\32\
---------------------------------------------------------------------------
\32\ 12 CFR 1030.8(a)(1).
---------------------------------------------------------------------------
Examiners found that one or more financial institutions advertised
bonuses for consumers who opened an account at the financial
institutions and met certain requirements that the advertisement
specified. These financial institutions failed to provide the promised
bonuses in instances where consumers met the requirements. The
financial institutions did not have appropriate quality control and
monitoring procedures to ensure all eligible consumers received the
bonus. Therefore, the advertisement of bonus offer was misleading and
inaccurate in violation of Regulation DD.
In response to the examiners' findings, the financial institutions
enhanced their account opening training, as well as monitoring and
quality control procedures, to ensure that consumer accounts were
correctly coded as bonus-eligible and that all consumers eligible for
the advertised bonuses received them.
2.4 Fair Lending
The Bureau's fair lending supervision program assesses compliance
with the Equal Credit Opportunity Act (ECOA) \33\ and its implementing
regulation, Regulation B,\34\ as well as the Home Mortgage Disclosure
Act (HMDA) \35\ and its implementing regulation, Regulation C,\36\ at
banks and nonbanks over which the Bureau has supervisory authority.
Examiners found one or more lenders engaged in violations of ECOA and
Regulation B.
---------------------------------------------------------------------------
\33\ 12 U.S.C. 1691.
\34\ 12 CFR 1002.
\35\ 12 U.S.C. 2801.
\36\ 12 CFR 1003.
---------------------------------------------------------------------------
2.4.1 Redlining
Regulation B prohibits discouragement of ``applicants or
prospective applicants'' and it also states: ``A creditor shall not
make any oral or written statement, in advertising or otherwise, to
applicants or prospective applicants that would discourage on a
prohibited basis a reasonable person from making or pursuing an
application.'' \37\ The Official Interpretations of Regulation B also
explains that Regulation B ``covers acts or practices directed at
prospective applicants that could discourage a reasonable person, on a
prohibited basis, from applying for credit.'' \38\
---------------------------------------------------------------------------
\37\ 12 CFR 1002.4(b).
\38\ 12 CFR part 1002, supp. I, para. 4(b)-1.
---------------------------------------------------------------------------
In the course of conducting supervisory activity of bank and
nonbank mortgage lenders, examiners have observed that one or more
lenders violated ECOA and Regulation B, intentionally redlining
majority-minority neighborhoods in two Metropolitan Statistical Areas
(MSAs) by engaging in acts or practices directed at prospective
applicants that may have discouraged reasonable people from applying
for credit.
Examiners determined that the lenders used marketing that would
discourage reasonable persons on a prohibited basis from applying to
the lenders for a mortgage loan. First, the lenders advertised in a
publication with a wide circulation in the MSAs, on a weekly basis, for
two years. These ads prominently featured a white model. Second, the
lenders' marketing materials, which were intended to be distributed to
consumers by the lenders' retail loan originators, featured almost
exclusively white models. Third, the lenders included headshots of the
lenders' mortgage professionals in nearly all its open house marketing
materials, and in almost all these
[[Page 55832]]
materials, the headshots showed professionals who appeared to be white.
The statistical analysis of the HMDA data and U.S. Census data
provided evidence regarding the lenders' intent to discourage
prospective applicants from majority-minority neighborhoods. General
and refined peer analyses showed that the lenders received
significantly fewer applications from majority-minority and high-
minority neighborhoods \39\ relative to other peer lenders in the MSAs.
Also, the lenders' direct marketing campaign that focused on majority-
white areas in the MSAs provided additional evidence of the lenders'
intent to discourage prospective applicants on a prohibited basis.
---------------------------------------------------------------------------
\39\ Examination teams defined majority-minority areas as >50%
minority and high-minority areas as >80% minority.
---------------------------------------------------------------------------
In response to the examination findings, lenders implemented
outreach and marketing programs focused on increasing their visibility
among consumers living in or seeking credit in majority-minority census
tracts in the MSAs. One or more lenders also are improving compliance
management systems, including board and management oversight,
monitoring and/or audit programs, and handling of consumer complaints.
2.4.2 Failure To Consider Public Assistance Income
The ECOA states that it is ``unlawful for any creditor to
discriminate against any applicant, with respect to any aspect of a
credit transaction . . . because all or part of the applicant's income
derives from any public assistance program.'' \40\ The Official
Interpretation of Regulation B defines ``public assistance program'' as
follows: ``Any Federal, State, or local governmental assistance program
that provides a continuing, periodic income supplement, whether
premised on entitlement or need, is `public assistance' for purposes of
the regulation. The term includes (but is not limited to) Temporary Aid
to Needy Families, food stamps, rent and mortgage supplement or
assistance programs, social security and supplemental security income,
and unemployment compensation.'' \41\ Regulation B allows a creditor to
``consider the amount and probable continuance of any income in
evaluating an applicant's creditworthiness.'' \42\ However, the
Official Interpretation further provides that ``[i]n considering the
separate components of an applicant's income, the creditor may not
automatically discount or exclude from consideration any protected
income. Any discounting or exclusion must be based on the applicant's
actual circumstances.'' \43\
---------------------------------------------------------------------------
\40\ 15 U.S.C. 1691(a)(2).
\41\ 12 CFR part 1002, supp. I, para. 2(z)-(3).
\42\ 12 CFR 1002.6(b)(5).
\43\ 12 CFR part 1002, supp. 1, para. 6(b)(5)-(3)(ii); see also
id. at 6(b)(5)-(1) (``A creditor must evaluate income derived from .
. . public assistance on an individual basis. . . .'').
---------------------------------------------------------------------------
Examiners found that one or more lenders violated ECOA and
Regulation B by maintaining a policy and practice that excluded certain
forms of public assistance income, without considering the applicant's
actual circumstances including unemployment compensation and SNAP
benefits, commonly known as food stamps, from consideration in
determining a borrower's eligibility for mortgage modification
programs. One or more lenders acknowledged that they excluded certain
types of public assistance income from income calculations when
evaluating loss mitigation applications, even though the lenders did
not have written policies directing the practice. Examiners identified
several instances whereby the applicant listed certain forms of public
assistance income in the loss mitigation application. In each instance,
the lenders excluded the public assistance income from their income
calculations and, in certain instances, the applicant was denied a loss
mitigation option due to insufficient income.
In response to the examination findings, the lenders updated
policies and procedures and enhanced training to ensure that their
practices concerning public assistance income comply with ECOA and
Regulation B. In addition, lenders identified borrowers who, due to
their reliance on certain forms of public assistance income, were
denied mortgage modifications or otherwise harmed. The lenders provided
such borrowers with financial remuneration and an appropriate mortgage
modification.
2.5 Mortgage Servicing
Recent mortgage servicing examinations have identified various
Regulation Z and Regulation X violations. These include violations of
Regulation Z requirements to provide consumers in bankruptcy with
periodic statements and violations of Regulation X provisions related
to force-placed insurance and escrow accounts. In the context of loan
transfers, examiners identified violations of Regulation X requirements
to provide servicing transfer notices and exercise reasonable diligence
to complete a loss mitigation application; violations of FDCPA
requirements to provide debt validation notices; and violations of
Regulation Z requirements to credit payments as of the date of receipt
and provide mortgage loan ownership transfer disclosures. Additionally,
examiners identified one or more ECOA violations for failure to
consider certain forms of public assistance income when considering
borrowers for mortgage modification programs (that violation is
summarized in the fair lending section of this issue).
2.5.1 Failure To Provide Consumers in Bankruptcy With Periodic
Statements
In general, Regulation Z requires servicers to provide consumers
with closed-end mortgage loans with periodic statements that meet
certain requirements.\44\ Prior to April 2018, servicers were not
required to provide periodic statements to consumers in bankruptcy.
After April 2018, servicers are required to provide periodic statements
when any consumer on the mortgage loan is in bankruptcy, unless an
exemption is met.\45\
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\44\ 12 CFR 1026.41(a).
\45\ See 12 CFR 1026.41(e)(5); 81 FR 72160 (Oct. 19, 2016),
available at: https://www.govinfo.gov/content/pkg/FR-2016-10-19/pdf/2016-18901.pdf.
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Examiners found that one or more servicers violated Regulation Z by
failing to provide periodic statements when a consumer on the loan was
in Chapter 12 or Chapter 13 Bankruptcy. Examiners found that causes
included system limitations and failure to reconcile accounting
records. The servicers contracted with third parties to maintain
records regarding costs related to bankruptcy. However, these records
were not reconciled with the servicers' systems of record, so the
servicers were unable to provide accurate information about the total
amount due, payment history, costs, and fees associated with the
account. Instead of reconciling the amounts to enable them to send
accurate statements, for a period of time servicers did not send
statements when a consumer was in in Chapter 12 or Chapter 13
Bankruptcy. In response to these findings, the servicers developed a
process to reconcile accounting records and began sending periodic
statements to consumers in Chapter 12 or Chapter 13 Bankruptcy in
accordance with the regulation.
2.5.2 Failure To Have a Reasonable Basis for Charging Borrowers for
Force-Placed Insurance
Under Regulation X, a servicer may not assess a borrower a premium
charge or fee for force-placed insurance unless the servicer has a
``reasonable basis'' to believe that the borrower failed to maintain
required hazard insurance.\46\
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\46\ 12 CFR 1024.37(b).
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[[Page 55833]]
Examiners found that one or more servicers violated Regulation X by
charging borrowers for force-placed insurance without a reasonable
basis for believing that the consumer had not maintained required
hazard insurance. Examiners found that in some instances borrowers had
provided their servicers with proof of required hazard insurance
policies, either directly or through their insurance companies.
However, the servicers failed to update their systems of record to
reflect receipt of this information and subsequently charged borrowers
for force-placed insurance. Examiners observed that this violation was
caused by inadequate procedures and lack of adequate staffing. In other
instances, the servicers received a bill for the borrowers' hazard
insurance but did not assign it to the proper account. The servicers
later charged borrowers for force-placed insurance, despite not having
a reasonable basis to believe that the borrowers lacked hazard
insurance. Examiners attributed this violation to a weakness in service
provider oversight. In response to these findings, the servicers are
improving service provider oversight or hiring new service providers to
manage force-placed insurance charges.
2.5.3 Failure To Timely Refund All Force-Placed Insurance Charges for
Overlapping Coverage
Regulation X generally requires a servicer to cancel force-placed
insurance and refund force-placed insurance premium charges for any
period where a consumer provides evidence of overlapping insurance
coverage within 15 days of receiving the evidence of coverage.\47\
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\47\ 12 CFR 1024.37(g)(1) & (2).
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Examiners found that one or more servicers violated Regulation X by
failing to cancel force-placed insurance and refund charges within 15
days of receiving evidence of overlapping insurance coverage. Examiners
observed that this was caused by failure to process proof of insurance
and insufficient staffing. In response to these findings, the servicers
are improving management of force-placed insurance programs to ensure
timely cancellation of force-placed insurance and timely refunds to
borrowers.
2.5.4 Permitted Repayment Options in Annual Escrow Statements
Under Regulation X, servicers generally must annually complete an
escrow analysis and determine the ``target balance'' in an escrow
account for the next escrow computation year.\48\ If the escrow account
balance is below the ``target balance,'' there is a ``shortage;'' if
the consumer's escrow account balance is negative, then there is a
``deficiency.'' \49\ Regulation X provides specific permitted options
for servicers as to the treatment of shortages and deficiencies. Which
options are available depends in part on the extent of the shortage or
deficiency.\50\ For example, for shortages equal to or greater than one
month's escrow account payment, the servicer must either (1) allow the
shortage to exist and do nothing to change it; or (2) require repayment
of the shortage in equal monthly payments over at least a 12-month
period.\51\ For deficiencies equal to or greater than one month's
escrow account payment, the servicer must either (1) allow the
deficiency to exist and do nothing to change it; or (2) require
repayment of the deficiency in equal monthly payments over a period of
2 months or more.\52\ Regulation X also requires servicers to send
borrowers annual escrow account statements which must include ``[a]n
explanation of how any shortage or deficiency is to be paid by the
borrower.'' \53\
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\48\ 12 CFR 1024.17(c)(3).
\49\ 12 CFR 1024.17(b).
\50\ 12 CFR 1024.17(f)(3) & (4).
\51\ 12 CFR 1024.17(f)(3)(ii).
\52\ 12 CFR 1024.17(f)(4)(ii).
\53\ 12 CFR 1024.17(i)(1)(vii).
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Examiners found that one or more servicers sent consumers annual
escrow account statements which included options for repayment of
shortages and deficiencies that are not enumerated in Regulation X.
Specifically, for borrowers with either shortages or deficiencies equal
to or greater than one month's escrow account payment, servicers listed
two options borrowers could choose for repayment: (1) Equal monthly
payments over a 12-month period or (2) a lump sum payment. The first
option is a permitted repayment option under Regulation X, while the
second option is not.\54\ Regulation X requires that annual escrow
account statements include an explanation of how shortages or
deficiencies are to be paid by borrowers.\55\ Because the enumerated
repayment options are exclusive, the servicers violated the regulatory
requirements by sending disclosures that provided borrowers with
repayment options that they cannot require under Regulation X.\56\
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\54\ See 12 CFR 1024.17(f)(3) & (4).
\55\ 12 CFR 1024.17(i)(1)(vii).
\56\ See 12 CFR 1024.17(i)(1)(vii).
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In response to these findings, the servicers are amending their
annual escrow disclosures to only include repayment options they are
permitted to require under Regulation X.
2.5.5 Violations After Servicing Transfers
Examiners have identified various violations after servicing
transfers, including: Failure to provide an accurate effective date for
the transfer of servicing in the required notice of servicing transfer;
\57\ failure to exercise reasonable diligence to obtain documents and
information necessary to complete a loss mitigation application; \58\
failure to credit a periodic payment as of the date of receipt; \59\
and, when a servicer is acting as a debt collector, failure to provide
a validation notice within 5 days of the initial communication with the
borrower when such notice is required.\60\
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\57\ 12 CFR 1024.33(b)(4)(i).
\58\ 12 CFR 1024.41(b)(1).
\59\ 12 CFR 1026.36(c)(1)(i).
\60\ 15 U.S.C. 1692g(a). The notice is required unless the
information is contained in the initial communication or the
consumer has paid the debt.
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For example, in the context of loans with loss mitigation
applications in process at the time of the transfer, certain
applications were virtually complete, but some transferee servicers
asked borrowers to submit new applications, leading examiners to
conclude that servicers had failed to exercise reasonable diligence to
obtain the information necessary to complete these loss mitigation
applications as the regulation requires. Examiners found that these
violations were caused by errors during the onboarding process as well
as inadequate policies and procedures. In response to these findings,
the servicers increased attention to due diligence during servicing
transfers and improved relevant policies and procedures to prevent
violations in future servicing transfers.
2.5.6 Failure To Provide Loan Ownership Transfer Disclosures
Regulation Z generally requires that when ownership of a loan
transfers, the new owner must send a disclosure with required content
to consumers.\61\
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\61\ 12 CFR 1026.39(b).
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Examiners found that one or more servicers failed to send consumers
the mortgage transfer disclosure after acquiring the loans, in
violation of Regulation Z. In response to these findings, the servicers
are reviewing the contracts that assign responsibilities between
transferees and transferors and reinforcing the regulatory requirements
internally; servicers who violated the rule will send mortgage transfer
[[Page 55834]]
disclosures after future transfers in accordance with Regulation Z.
2.6 Payday Lending
The Bureau's Supervision program covers entities that offer or
provide payday loans. Examinations of these lenders identified
deceptive acts or practices and violations of Regulation Z.
2.6.1 Misleading Representations About the Ability To Apply for a Loan
Online
Sections 1031 and 1036(a)(1)(b) of the Consumer Financial
Protection Act (CFPA) prohibit a covered person such as a payday lender
from engaging in any unfair, deceptive, or abusive act or practice.\62\
A representation, omission, or practice is deceptive if: (1) The
representation, omission, or practice misleads or is likely to mislead
the consumer; (2) the consumer's interpretation of the representation,
omission, or practice is reasonable under the circumstances; and (3)
the misleading representation, omission, or practice is material.\63\
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\62\ 12 U.S.C. 5531, 5536(a)(1)(B).
\63\ See FTC Policy Statement on Deception, appended to In re
Cliffdale Assoc., Inc., 103 F.T.C. 110, 174 (1984).
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Examiners found that one or more lenders engaged in deceptive acts
or practices in violation of the CFPA when they represented on websites
and in mailed advertising that consumers could apply for payday loans
online. Examiners found the representations misled or were likely to
mislead consumers. Although consumers could enter limited information
online, the lenders required them to visit physical storefront
locations to re-enter information and complete the loan application
process. A consumer could reasonably interpret the express and indirect
representations to mean they could complete the application process
online. The representations were material because they were likely to
affect consumer decisioning. For example, a consumer could have chosen
to apply with a different lender who had a faster or otherwise more
convenient process. In response to examination findings, the entity or
entities ceased misleading advertising on websites and in mailed
advertising, and implemented enhanced advertising policies and
procedures and oversight.
2.6.2 False Representation That No Credit Check Will Be Conducted
Examiners observed one or more lenders engaged in deceptive acts or
practices in violation of the CFPA when they falsely represented on
proprietary websites, social media, and other advertising that they
would not conduct a credit check. In fact, the lenders used consumer
reports from at least one CRC in determining whether to extend credit.
It was reasonable for a consumer to interpret the representations as
meaning that the lenders would not check a consumer's credit history
when deciding whether to extend credit, and the representations were
material because they were likely to affect consumers' conduct with
respect to loans. Prospective customers may have had credit history
concerns and made a different choice. In response to the examination
findings, one or more lenders ceased making misleading representations
online and elsewhere, and implemented enhanced advertising policies and
procedures and oversight.
2.6.3 False Threats of Lien Placement or Asset Seizure
Examiners found one or more lenders engaged in deceptive acts or
practices by sending collection letters that falsely threatened lien
placement or asset seizure if consumers did not make payments, although
the entities did not take those measures. Moreover, certain consumer
assets may have been exempt from lien or seizure under State law. It
was reasonable for consumers to interpret the representations to mean
that the entities could and would take such measures, and the
statements were material because consumers may have made different
payment choices had they known the representations were false. In
response to the examination findings, one or more entities ceased
including the erroneous information in collection letters.
2.6.4 False Threats of Being Subject to Late Payment Fee
Examiners found one or more lenders engaged in deceptive acts or
practices by sending collection letters that falsely threatened to
charge late fees if consumers did not make payments, even though the
entities did not charge late fees. A consumer could reasonably
interpret the representations as meaning that the entities would charge
late fees absent payment. Such threats were material, because they were
likely to affect consumers' payment choices. In response to the
findings, one or more lenders ceased including the false statements in
collection letters.
2.6.5 Failure To Make Triggering Disclosures in Payday Loan
Advertisements
Regulation Z requires advertisements for closed-end credit that
contain certain triggering terms, such as the amount of any finance
charge, to disclose additional terms.\64\ Required additional
advertising disclosures include the annual percentage rate (APR) and
terms of repayment.\65\
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\64\ 12 CFR 1026.24(d)(1).
\65\ 12 CFR 1026.24(d)(2)(ii) and (iii).
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Examiners observed that one or more lenders failed to provide
required additional disclosures in advertisements offering ``free''
loans to new customers. An advertisement of the total cost of consumer
credit is an advertisement of the dollar amount of a finance
charge,\66\ a triggering term.\67\ Accordingly, the entities were
obligated to provide additional advertising disclosures under
Regulation Z. In response to the findings, one or more entities
implemented enhanced advertising policies and procedures and oversight,
and ensured that all applicable advertisements that contain triggering
terms include required Regulation Z disclosures.
---------------------------------------------------------------------------
\66\ See 12 CFR 1026.4(a).
\67\ 12 CFR 1026.24(d)(1)(iv).
---------------------------------------------------------------------------
2.6.6 Not Actually Prepared To Offer Advertised Loan Term
Regulation Z also requires an advertisement for credit that states
specific credit terms to state only those terms that actually are or
will be arranged or offered by the creditor.\68\ Examiners concluded
that one or more entities violated Regulation Z when they advertised
that a new customer's first payday loan would be free, even though the
lenders were not actually prepared to offer the advertised term.
Instead, the entities offered consumers one free week for loans lasting
longer than one week, that featured considerable APRs. In response to
the findings, one or more entities implemented enhanced advertising
policies and procedures and oversight, and, ceased advertising loan
terms that lenders were not actually prepared to offer, including that
a consumer's first loan would be free.
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\68\ 12 CFR 1026.24(a).
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3. Supervision Program Developments
3.1 COVID-19 Related Information and Guidance
3.1.1 Interagency Statement on Pandemic Planning
On March 6, 2020, the Federal Financial Institutions Examination
Council (FFIEC) on behalf of its member agencies published updated
guidance \69\ identifying actions that financial institutions should
take to minimize the potential adverse effects of a pandemic. The
statement noted that financial
[[Page 55835]]
institutions should periodically review related risk management plans,
including business continuity plans, to ensure that they are able to
continue to deliver products and services in a wide range of scenarios
with minimal disruption.
---------------------------------------------------------------------------
\69\ The statement can be found at: https://www.federalreserve.gov/supervisionreg/srletters/SR2003a1.pdf.
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3.1.2 Joint Statement Encouraging Responsible Small-Dollar Lending in
Response to COVID-19
On March 26, 2020, the Bureau along with the Board of Governors of
the Federal Reserve Bank, the Federal Deposit Insurance Corporation,
the National Credit Union Administration and the Office of the
Comptroller of Currency (collective the Agencies) issued a joint
statement \70\ that encouraged banks, savings associations, and credit
unions to offer responsible small-dollar loans to consumers and small
businesses in response to COVID-19. The statement noted that loans
should be offered in a manner that provides fair treatment of
consumers, complies with applicable laws and regulations, and is
consistent with safe and sound practices. The joint statement also
encouraged lenders to work with borrowers who may experience unexpected
circumstances and cannot repay a loan as structured.
---------------------------------------------------------------------------
\70\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_interagency-statement_small-dollar-lending-covid-19_2020-03.pdf.
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3.1.3 CFPB Provides Flexibility During COVID-19 Pandemic
On March 26, 2020, the Bureau published three separate statements
\71\ noting its flexible approach during the pandemic. The Bureau
announced that as of March 26, 2020, and until further notice the
Bureau does not intend to cite in an examination or initiate an
enforcement action against an entity for failure to submit to the
Bureau:
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\71\ The three statements are: (1) Statement on Supervisory and
Enforcement Practices Regarding Quarterly Reporting Under the Home
Mortgage Disclosure Act; (2) Statement on Supervisory and
Enforcement Practices Regarding Bureau Information Collections for
Credit Card and Prepaid Account Issuers; and (3) Statement on Bureau
Supervisory and Enforcement Response to COVID-19 Pandemic. The
statements can be found at: https://files.consumerfinance.gov/f/documents/cfpb_hmda-statement_covid-19_2020-03.pdf, https://files.consumerfinance.gov/f/documents/cfpb_data-collection-statement_covid-19_2020-03.pdf, https://files.consumerfinance.gov/f/documents/cfpb_supervisory-enforcement-statement_covid-19_2020-03.pdf.
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[ssquf] Quarterly submissions of HMDA data;
[ssquf] annual submissions concerning agreements between credit
card issuers and institutions of higher education;
[ssquf] quarterly submission of consumer credit card agreements;
[ssquf] collection of certain credit card price and availability
information; and
[ssquf] submission of prepaid account agreements and related
information.
Entities should maintain records sufficient to allow them to make
delayed submissions pursuant to future Bureau guidance.
The Bureau also announced that it will work with affected financial
institutions in scheduling examinations and other supervisory
activities to minimize disruption and burden. When conducting
examinations and other supervisory activities and in determining
whether to take enforcement action, the Bureau will consider the
circumstances that entities may face as a result of the COVID-19
pandemic and will be sensitive to good-faith efforts demonstrably
designed to assist consumers.
3.1.4 Statement on Supervisory and Enforcement Practices Regarding the
Fair Credit Reporting Act and Regulation V in Light of the CARES Act
On April 1, 2020, the Bureau released a statement,\72\ which
outlined the responsibilities of CRCs and furnishers during the COVID-
19 pandemic. The statement noted that the CARES Act requires lenders to
report to CRCs that a consumer is current on their loans if the lender
has provided the consumer with payment relief in certain circumstances.
In addition, the Bureau noted temporary and targeted flexibility in its
supervisory and enforcement approach for lenders and CRCs facing
challenges as a result of the COVID-19 pandemic in the time they take
to investigate disputes. The Bureau stated that it will consider a
furnisher's or CRC's individual circumstances and does not intend to
cite in an examination or bring an enforcement action against firms
impacted by the pandemic who exceed the deadlines to investigate such
disputes as long as they make good faith efforts during the pandemic to
do so as quickly as possible. The Bureau also released FAQs on June 16,
2020, to help ensure that consumers receive the credit reporting
protections required by the CARES Act.\73\
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\72\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_credit-reporting-policy-statement_cares-act_2020-04.pdf.
\73\ The FAQs can be found at: https://files.consumerfinance.gov/f/documents/cfpb_fcra_consumer-reporting-faqs-covid-19_2020-06.pdf.
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3.1.5 Joint Statement on Supervisory and Enforcement Practices
Regarding the Mortgage Servicing Rules in Response to COVID-19 and the
CARES Act
On April 3, 2020, the Agencies and the State financial regulators
issued a joint policy statement \74\ providing regulatory flexibility
to enable mortgage servicers to work with struggling consumers affected
by the COVID-19 emergency.\75\ The statement informs servicers of the
Agencies' flexible supervisory and enforcement approach during the
COVID-19 emergency regarding certain communications to consumers
required by the mortgage servicing rules.
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\74\ The statement can be found at: https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20200403a1.pdf.
\75\ In conjunction with this statement, the Bureau published,
``Mortgage Servicing Rules FAQs Related to the COVID-19 Emergency.''
The FAQs can be found at: https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing-rules-covid-19_faqs.pdf.
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The policy statement clarified that the agencies do not intend to
take supervisory or enforcement action against mortgage servicers for:
[ssquf] Delays in sending certain early intervention and loss
mitigation notices and taking certain related actions required by the
mortgage servicing rules, provided that servicers are making good faith
efforts to provide these notices and take these actions within a
reasonable time;
[ssquf] failing to provide an acknowledgement notice within five
days of receipt of an incomplete application, where the borrower enters
certain short-term payment forbearance programs or short-term repayment
plans, provided the servicer sends the acknowledgment notice before the
end of the forbearance or repayment period; and
[ssquf] delays in sending annual escrow statements, provided that
servicers are making good faith efforts to provide these statements
within a reasonable time.
3.1.6 Interagency Statement on Loan Modifications by Financial
Institutions Working With Customers Affected by the Coronavirus
On April 7, 2020, the Agencies, in consultation with State
financial regulators, issued an interagency statement \76\ encouraging
financial institutions to work constructively with borrowers affected
by COVID-19 and providing additional information
[[Page 55836]]
regarding accounting and reporting considerations for loan
modifications.\77\ The statement encouraged financial institutions to
work with borrowers impacted by the coronavirus and promised not to
criticize institutions for doing so in a safe-and-sound manner. It also
highlighted that when working with borrowers, lenders and servicers
should adhere to consumer protection requirements, including fair
lending laws, to provide the opportunity for all borrowers to benefit
from these arrangements. It stated that Agencies will consider various
facts and circumstances when conducting supervisory work evaluating
compliance during the relevant time period. Additionally, it stated
that the Agencies do not expect to take a consumer compliance public
enforcement action against an institution, provided that the
circumstances were related to the national emergency and that the
institution made good faith efforts to support borrowers and comply
with the consumer protection requirements, as well as respond to any
needed corrective action.
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\76\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_interagency-statement_loan-modifications-reporting-covid-19_2020-04.pdf.
\77\ This statement replaces one previously issued by the
Agencies on March 22, 2020. The revised statement clarifies the
interaction between the interagency statement issued on March 22,
2020, and the temporary relief provided by section 4013 of the CARES
Act.
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3.1.7 Treatment of Pandemic Relief Payments Under Regulation E and
Application of the Compulsory Use Prohibition
On April 13, 2020, the Bureau issued an interpretive rule \78\ to
provide guidance to government agencies distributing aid to consumers
in response to the COVID-19 pandemic.
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\78\ The interpretative rule can be found at: https://files.consumerfinance.gov/f/documents/cfpb_interpretive-rule_pandemic-relief-payments-reg-e.pdf and at: https://www.federalregister.gov/documents/2020/04/27/2020-08084/treatment-of-pandemic-relief-payments-under-regulation-e-and-application-of-the-compulsory-use.
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The Bureau concluded that certain pandemic-relief payments are not
``government benefits'' for purposes of Regulation E and EFTA and are
therefore not subject to the compulsory use prohibition in EFTA, if
certain conditions are met.
Specifically, the Bureau interprets the term ``government benefit''
to exclude payments from Federal, State, or local governments if those
payments are made:
1. To provide assistance to consumers in response to the COVID-19
pandemic or its economic impacts;
2. Outside of an already-established government benefit program;
3. On a one-time or otherwise limited basis; and
4. Without a general requirement that consumers apply to the agency
to receive funds.
3.1.8 Interagency Statement on Appraisals and Evaluations for Real
Estate Related Transactions Affected by the Coronavirus
On April 14, 2020, the Bureau, together with the Agencies, issued
an interagency statement outlining flexibilities in industry appraisal
standards and in appraisal regulations and described temporary changes
to Fannie Mae and Freddie Mac appraisal standards.
3.1.9 Compliance Bulletin and Policy Guidance: Handling of Information
and Documents During Mortgage Servicing Transfers (CFPB Bulletin 2020-
02)
On April 24, 2020, the Bureau published a Bulletin \79\ to provide
mortgage servicers clarity, facilitate compliance, and prevent harm to
consumers during the transfer of residential mortgages.
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\79\ The bulletin can be found at: https://files.consumerfinance.gov/f/documents/cfpb_policy-guidance_mortgage-servicing-transfers_2020-04.pdf. The bulletin is also available in
the Federal Register at 85 FR 25281 (May 1, 2020).
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Regulation X imposes specific requirements on transferors and
transferees to prevent harm to consumers resulting from servicing
transfers, including requiring transferee servicers to maintain
policies and procedures that are reasonably designed to ensure that the
servicer can identify necessary documents or information that may not
have been transferred by a transferor servicer and obtain such
documents from the transferor servicer. The Bulletin listed some
examples of servicer practices that the Bureau may consider as
contributing to policies and procedures that are reasonably designed to
achieve the objectives of these transfer requirements, including:
[ssquf] Developing a servicing transfer plan that includes a
communications plan, testing plan (for system conversion), a timeline
with key milestones and an escalation plan for potential problems;
[ssquf] Engaging in quality control work after a transfer of
preliminary data to validate that the data on the transferee's system
matches the data submitted by the transferor;
[ssquf] Conducting a post-transfer review or debrief to determine
effectiveness of the transfer plan and whether any gaps have arisen
that require resolution;
[ssquf] Monitoring consumer complaints and loss mitigation
performance metrics; and
[ssquf] Identifying any loans in default, active foreclosure and
bankruptcy or any forbearance or other loss mitigation agreements
entered in with the borrower.
The Bulletin also highlights the importance of data quality. To
that end, it encourages servicers to adopt an industry data standard
for mortgage records, called Mortgage Industry Standards Maintenance
Organization standards.
The Bureau noted that it began developing the Bulletin well before
the coronavirus pandemic, in consultation with interagency and
intergovernmental partners. In light of the national emergency declared
on March 13, 2020, the Bulletin sets forth that, if a servicing
transfer is requested or required by a Federal regulator or by the
security issuer of ``Government Loans'' (as defined in the CARES Act)
during a specified time frame, the Bureau will take into consideration
the challenges facing mortgage servicers due to COVID-19 and will focus
any supervisory feedback for institutions on identifying issues,
correcting deficiencies, and ensuring appropriate remediation for
consumers.
3.1.10 CFPB Paves Way for Consumers Facing Financial Emergencies To
Obtain Access to Mortgage Credit More Quickly
On April 29, 2020, the Bureau issued an interpretive rule
clarifying that consumers can exercise their rights to modify or waive
certain required waiting periods under the TILA-RESPA Integrated
Disclosure Rule and Regulation Z rescission rules.\80\ The Bureau also
issued an FAQ document \81\ that addresses when creditors must provide
appraisals or other written valuations to mortgage applicants in order
to expedite access to credit for consumers affected by the COVID-19
pandemic.
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\80\ The interpretative rule can be found at: https://files.consumerfinance.gov/f/documents/cfpb_tila-respa-integrated-disclosure_rescission-pandemic-interpretive-rule.pdf.
\81\ The FAQs can be found at: https://files.consumerfinance.gov/f/documents/cfpb_mortgage-origination-rules_faqs-covid-19.pdf.
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3.1.11 Amendments to the Remittance Rule and Statement on Supervisory
and Enforcement Practices Regarding the Remittance Rule in Light of the
COVID-19 Pandemic
On May 11, 2020, the Bureau issued a final rule amending the
remittance rule.\82\ Among its requirements, the remittance rule
mandates that remittance transfer providers generally must disclose the
exact exchange rate,
[[Page 55837]]
the amount of certain fees, and the amount expected to be delivered to
the recipient. The remittance rule also allows for insured institutions
to estimate certain fees and exchange rate information under certain
circumstances, but by statute, this provision expires in July 2020.
---------------------------------------------------------------------------
\82\ 12 CFR 1005.30 et seq.
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The amendments in the May 2020 rule, which will become effective in
July of 2020, allow certain banks and credit unions to continue to
provide estimates of the exchange rate and certain fees under certain
conditions. The amendments also increase the safe harbor threshold that
determines whether an entity makes remittance transfers in the normal
course of its business and is subject to the rule. Under the
amendments, entities making 500 or fewer transfers annually in the
current and prior calendar years are not subject to the rule.
In April, the Bureau announced that it would take a flexible
enforcement and supervisory approach in light of the expiration of the
statutory temporary exception and the challenges the COVID-19 pandemic
may cause insured institutions as they prepare to commence providing
actual third-party fee and exchange rate information as of July 21,
2020.\83\
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\83\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_policy-statement_remittances-covid-19_2020-04.pdf.
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For international remittance transfers that occur on or after July
21, 2020 and before January 1, 2021, the Bureau will neither cite
supervisory violations nor initiate enforcement actions against insured
institutions for continuing to provide estimates to consumers under the
temporary exception, instead of actual amounts.
3.1.12 Statement on Supervisory and Enforcement Practices Regarding
Regulation Z Billing Error Resolution Timeframes in Light of the COVID-
19 Pandemic
On May 13, 2020, the Bureau issued a statement informing creditors
of the Bureau's flexible supervisory and enforcement approach during
the pandemic regarding the timeframe within which creditors complete
their investigations of consumers' billing error notices.\84\
Specifically, in evaluating a creditor's compliance with the maximum
timeframe for billing error resolution set forth in Regulation Z, the
Bureau intends to consider the creditor's circumstances. The Bureau
does not intend to cite a violation in an examination or bring an
enforcement action against a creditor that takes longer than required
by the regulation to resolve a billing error notice, so long as the
creditor has made good faith efforts to obtain the necessary
information and make a determination as quickly as possible, and
complies with all other requirements pending resolution of the error.
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\84\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_statement_regulation-z-error-resolution-covid-19_2020-05.pdf.
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3.1.13 CFPB, CSBS Issue Consumer Guide on Mortgage Relief Options
On May 15, 2020, the Bureau and the Conference of State Bank
Supervisory (CSBS) issued a guide to assist homeowners with federally
backed loans through the process of obtaining mortgage relief. The
guide details borrowers' rights to mortgage payment forbearance and
foreclosure protection under the CARES Act.\85\
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\85\ The guide can be found at: https://files.consumerfinance.gov/f/documents/cfpb_csbs_consumers-forbearance-guide_2020-05.pdf.
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3.1.14 Complaint Bulletin
On May 21, 2020, the Bureau issued a consumer complaint
Bulletin.\86\ The bulletin shows that mortgage and credit card
complaints top the list of complaints the Bureau has received that
mention coronavirus or related terms. In April and May, the Bureau
received historically higher complaints, however, complaints mentioning
COVID-related terms amounted to a total of 4,500 complaints during
those two months.
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\86\ The complaint bulletin can be found at: https://files.consumerfinance.gov/f/documents/cfpb_complaint-bulletin_coronavirus-complaints.pdf.
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Mortgage and credit card complaints top the list for complaints
that mention coronavirus terms, with 22 percent and 19 percent of
complaints, respectively. Among mortgage complaints that mention
coronavirus keywords, 59 percent of consumers identified struggling to
pay the mortgage as the issue. For credit card complaints, 19 percent
of consumers identified a problem with purchase shown or statement as
the issue.
The Bureau also received its highest complaint volumes in its
history in March and April at 36,700 and 42,500, respectively. In 2019,
the monthly average for complaints was 29,000. The bulletin attributes
the higher numbers to factors such as market conditions and more public
awareness of the complaint system.
3.1.15 Prioritized Assessments
The COVID-19 pandemic has significantly impacted the financial
marketplace and has resulted in a temporary shift in the Bureau's
supervisory work. In late May, the Bureau rescheduled some of its
planned examination work and instead began conducting Prioritized
Assessments (PAs). PAs are higher-level inquiries than traditional
examinations, designed to obtain real-time information from entities
that operate in markets posing elevated risk of consumer harm due to
pandemic-related issues. In July of 2020, the Bureau released
Prioritized Assessments FAQs.\87\
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\87\ The FAQs can be found at: https://files.consumerfinance.gov/f/documents/cfpb_prioritized-assessment_frequently-asked-questions.pdf.
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3.1.16 Statement on Supervisory and Enforcement Practices Regarding
Electronic Credit Card Disclosures in Light of COVID-19 Pandemic
On June 3, 2020, the Bureau issued a statement \88\ indicating that
it will take a flexible supervisory and enforcement approach during the
pandemic regarding card issuers' electronic provision of disclosures
required to be in writing for account-opening disclosures and temporary
rate or fee reduction disclosures mandated under the provisions
governing non-home secured, open-end credit in Regulation Z.
Specifically, this statement pertains to oral telephone interactions
where a card issuer may seek to open a new credit card account for a
consumer, to provide certain temporary reductions in APRs or fees
applicable to an existing account, or to offer a low-rate balance
transfer. In these instances, the Bureau does not intend to cite a
violation in an examination or bring an enforcement action against an
issuer that during a phone call does not obtain a consumer's E-Sign
consent to electronic provision of the written disclosures required by
Regulation Z, so long as the issuer during the phone call obtains both
the consumer's oral consent to electronic delivery of the written
disclosures and oral affirmation of his or her ability to access and
review the electronic written disclosures.
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\88\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_e-sign-credit-card_statement_2020-06.pdf.
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3.1.17 CFPB and State Regulators Provide Additional Guidance To Assist
Borrowers Impacted by the COVID-19 Pandemic
On June 4, 2020, the Bureau and CSBS issued joint guidance to
mortgage servicers to assist in complying with the CARES Act.\89\
Servicers of federally-backed mortgages, such as Fannie Mae or Freddie
Mac, Department of Housing
[[Page 55838]]
and Urban Development, Department of Veterans Affairs, or Department of
Agriculture loans, must grant forbearance to borrowers with pandemic-
related hardships that may last as long as two consecutive 180-day
periods. Furthermore, additional interest, fees, or penalties beyond
the amounts scheduled or calculated should be waived with no negative
impact to the borrower's mortgage contract during the forbearance.
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\89\ The guidance can be found at: https://files.consumerfinance.gov/f/documents/cfpb_csbs_industry-forbearance-guide_2020-06.pdf.
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Mortgage servicers could violate the CARES Act or other applicable
law and potentially cause consumer harm if they were to require
documentation from borrowers to prove financial hardship, if they did
not grant the forbearance once properly requested, or if they steered
borrowers away from forbearance or misled them.
3.1.18 CFPB Issues Interim Final Rule on Loss Mitigation Options for
Homeowners Recovering From Pandemic-Related Financial Hardships
On June 23, 2020, the Bureau issued an interim final rule (IFR)
\90\ that will make it easier for consumers to transition out of
financial hardship caused by the COVID-19 pandemic and easier for
mortgage servicers to assist those consumers.
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\90\ The IFR can be found at: https://files.consumerfinance.gov/f/documents/cfpb_interim-final-rule_respa_covid-19-related-loss-mitigation-options.pdf.
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The CARES Act provides forbearance relief for consumers with
federally-backed mortgage loans. The mortgage industry has developed
different options for borrowers to repay the payments that were
forborne under the CARES Act. For example, the Federal Housing Finance
Agency, Fannie Mae and Freddie Mac may permit some borrowers to defer
repayment of the forborne amounts until the end of the mortgage loan.
The Federal Housing Administration (FHA) has a similar program. These
programs require the servicer to collect only minimal information from
the borrower before offering the option.
The IFR makes it clear that servicers do not violate Regulation X
by offering certain COVID-19-related loss mitigation options based on
an evaluation of limited application information collected from the
borrower. Normally, with certain exceptions, Regulation X would require
servicers to collect a complete loss mitigation application before
making an offer. The IFR specifies that the loss mitigation option must
meet certain criteria to qualify for an exception from the typical
requirement to collect a complete application. Among other things, the
option must allow the borrower to delay paying all principal and
interest payments that were forborne or became delinquent as a result
of a financial hardship due, directly or indirectly, to the COVID-19
emergency. Servicers may not charge any fees to borrowers in connection
with the option, and the borrower's acceptance ends any preexisting
delinquency. The exception is not limited to payments forborne under
the CARES Act.
The IFR also provides servicers relief from certain requirements
under Regulation X that normally would apply after a borrower submits
an incomplete loss mitigation application. Once the borrower accepts an
offer for an eligible program under the IFR, the servicer need not
exercise reasonable diligence to obtain a complete application and need
not provide the acknowledgment notice that is generally required under
Regulation X when a borrower submits a loss mitigation application.
Servicers still must comply with Regulation X's other requirements
after a borrower accepts a loss mitigation offer. For example, if the
borrower becomes delinquent again after accepting the offer, the
servicer would have to satisfy Regulation X's early intervention
requirements. Similarly, if the servicer receives a new loss mitigation
application from the borrower, the servicer would have to comply with
Regulation X's loss mitigation procedures.
3.2 Non-COVID Related Guidance
3.2.1 Statement of Policy Regarding Prohibition on Abusive Acts or
Practices
On January 24, 2020, the Bureau issued a policy statement \91\
providing a framework on how it intends to apply the ``abusiveness''
standard in supervision and enforcement matters. Through this policy
statement, the Bureau provided clarification on how it intends to apply
abusiveness in order to promote compliance and certainty. In its
supervision and enforcement work, the Bureau intends to:
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\91\ The statement can be found at: https://files.consumerfinance.gov/f/documents/cfpb_abusiveness-enforcement-policy_statement.pdf.
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[ssquf] Focus on citing or challenging conduct as abusive in
supervision and enforcement matters only when the harm to consumers
outweighs the benefit.
[ssquf] Generally, avoid ``dual pleading'' of abusiveness and
unfairness or deception violations arising from all or nearly all the
same facts, and allege ``stand alone'' abusiveness violations that
demonstrate clearly the nexus between cited facts and the Bureau's
legal analysis.
[ssquf] Seek monetary relief for abusiveness only when there has
been a lack of a good-faith effort to comply with the law, except the
Bureau will continue to seek legal or equitable remedies, such as
damages and restitution for injured consumers regardless of whether a
company acted in good faith or bad faith.
3.2.2 Responsible Business Conduct: Self-Assessing, Self-Reporting,
Remediating, and Cooperation (CFPB Bulletin 2020-01)
In 2013, the Bureau issued a Bulletin that identified several
activities that businesses may engage in that could prevent and
minimize harm to consumers, referring to these activities as
``responsible conduct.'' On March 6, 2020, the Bureau issued an updated
Bulletin \92\ to clarify its approach to responsible conduct and to
reiterate the importance of such conduct. The Bulletin noted that the
Bureau principally considers four categories of conduct when evaluating
whether some form of credit is warranted in an enforcement
investigation or supervisory matter: Self-assessing, self-reporting,
remediating, and cooperating. However, if an entity engages in another
type of activity particular to its situation that is both substantial
and meaningful, the Bureau may take that activity into consideration as
well.
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\92\ The Bulletin can be found at: https://files.consumerfinance.gov/f/documents/cfpb_bulletin-2020-01_responsible-business-conduct.pdf.
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3.2.3 Innovation Updates
On May 22, 2020, the Bureau announced that it issued two No-Action
Letter (NAL) Templates under its innovation policies. To encourage
innovation, last year the Bureau introduced an improved NAL Policy that
includes, among other things, a more streamlined review process
focusing on the consumer benefits and risks of the applicant's product
or service. NALs provide increased regulatory certainty through a
statement that the Bureau will not bring a supervisory or enforcement
action against a company for providing a product or service under
certain facts and circumstances. The improved Policy also includes an
innovative provision concerning NAL templates, which permits entities
such as service providers and trade associations to secure a template
that can serve as the foundation for NAL applications from companies
that provide consumer financial products and services.
[[Page 55839]]
Specifically, NAL templates include (among other things) a non-binding
statement of the Bureau's intent to grant NAL applications based on it.
Using the first NAL Template, requested by Brace Software, Inc.
(Brace), mortgage servicers seeking to assist struggling borrowers
would be able to apply for NALs in connection with the use of Brace's
online platform to implement loss-mitigation efforts for those
borrowers.\93\ As described in Brace's application, the platform is an
online version of the Fannie Mae Form 710, which is the loss mitigation
application used by most mortgage servicers. While the Bureau does not
endorse particular products or providers, the Bureau observes that
digitizing the loss mitigation application process has the potential to
improve a process that is experiencing an increase in loss mitigation
requests from consumers due to the COVID-19 pandemic.
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\93\ Brace's application can be found at: https://files.consumerfinance.gov/f/documents/cfpb_brace_no-action-letter-request.pdf. The Brace NAL Template can be found at: https://files.consumerfinance.gov/f/documents/cfpb_brace_no-action-letter.pdf.
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The Bureau also approved a NAL template that insured depository
institutions intending to offer the standardized, small-dollar credit
product described therein can use to support applications for the
issuance of individual NALs.\94\ The NAL template contemplates that
NALs based on it will include certain important protections for
consumers who seek the covered small-dollar loan products.
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\94\ The Bank Policy Institute (the BPI) application can be
found at: https://files.consumerfinance.gov/f/documents/cfpb_bpi_no-action-letter-request.pdf. The BPI NAL Template can be found at:
https://files.consumerfinance.gov/f/documents/cfpb_bpi_no-action-letter.pdf.
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3.2.4 Bureau Launches Pilot Advisory Opinion Program To Provide
Regulated Entities Clear Guidance and Improve Compliance
On June 18, 2020, the Bureau launched a pilot advisory opinion (AO)
program \95\ to publicly address regulatory uncertainty in the Bureau's
existing regulations. The pilot AO program will allow entities seeking
to comply with regulatory requirements to submit a request where
uncertainty exists. The Bureau will then select topics based on the
program's priorities and make the responses available to the public.
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\95\ More information about the AO program can be found at:
https://files.consumerfinance.gov/f/documents/cfpb_advisory-opinions-pilot_fr-notice.pdf, https://files.consumerfinance.gov/f/documents/cfpb_advisory-opinions-proposal_fr-notice.pdf.
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The pilot program will focus on four key priorities:
[ssquf] Consumers are provided with timely and understandable
information to make responsible decisions.
[ssquf] Identify outdated, unnecessary or unduly burdensome
regulations in order to reduce regulatory burdens.
[ssquf] Consistency in enforcement of Federal consumer financial
law in order to promote fair competition.
[ssquf] Ensuring markets for consumer financial products and
services operate transparently and efficiently to facilitate access and
innovation.
Additionally, initial factors weighing for the appropriateness of
an AO include: That the interpretive issue has been noted during prior
Bureau examinations as one that might benefit from additional
regulatory clarity; that the issue is one of substantive importance or
impact or one whose clarification would provide significant benefit;
and/or that the issue concerns an ambiguity that the Bureau has not
previously addressed through an interpretive rule or other
authoritative source. There will be a strong presumption against
appropriateness of an AO for issues that are the subject of an ongoing
investigation or enforcement action or the subject of an ongoing or
planned rulemaking.
If deemed appropriate, the Bureau will issue an advisory opinion
based on its summary of the facts presented that would be applicable to
other entities in situations with similar facts and circumstances. The
advisory opinions would be posted on the Bureau's website and published
in the Federal Register.
In addition to the pilot, the Bureau also announced that the public
can comment on the proposed AO program. Following the conclusion of the
pilot, the proposed AO program will be fully implemented after the
Bureau's review of comments received.
3.2.5 CFPB Issues Interpretative Rule on Method for Determining
Underserved Areas
On June 23, 2020, the Bureau issued an interpretive rule \96\ with
respect to how the Bureau determines which counties qualify as
``underserved'' for a given calendar year under Regulation Z.
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\96\ The interpretative rule can be found at: https://files.consumerfinance.gov/f/documents/cfpb_interpretive-rule_determining-underserved-areas-using-hmda-data.pdf.
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The Bureau's annual list of rural and underserved counties and
areas is used in applying various provisions under Regulation Z, which
implements the Truth in Lending Act (TILA). These provisions include
the exemption from the requirement to establish an escrow account for a
higher-priced mortgage loan and the ability to originate balloon-
payment qualified mortgages and balloon-payment high cost mortgages.
Regulation Z states that an area is ``underserved'' during a
calendar year if, according to HMDA data for the preceding calendar
year, it is a county in which no more than two creditors extended
covered transactions secured by first liens on properties in the county
five or more times. The Bureau previously interpreted how HMDA data
would be used to determine which areas meet this standard using a
method set forth in the commentary to Regulation Z. However, portions
of this method have become obsolete because they rely on data elements
that were modified or eliminated by certain 2015 amendments to the
Bureau's HMDA regulations, which became effective in 2018.
The interpretive rule describes the HMDA data that will instead be
used in determining that an area is ``underserved'' for purposes of the
standard described in Regulation Z. This interpretation supersedes the
outdated methodology set forth in the commentary to Regulation Z.
4. Remedial Actions
4.1 Public Enforcement Actions
The Bureau's supervisory activities resulted in or supported the
following public enforcement actions.
4.1.1 Citizens Bank, N.A.
On January 30, 2020, the Bureau filed suit against Citizens Bank,
N.A. (Citizens), a national banking association headquartered in
Providence, Rhode Island. The Bureau's complaint \97\ alleges
violations of TILA and TILA's implementing Regulation Z, including
violations of amendments to TILA contained in the Fair Credit Billing
Act (FCBA) and the Credit Card Accountability Responsibility and
Disclosure Act (CARD Act).
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\97\ The complaint can be found at: https://files.consumerfinance.gov/f/documents/cfpb_citizens-bank_complaint_2020-01.pdf.
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As described in the complaint, the Bureau alleges that for several
years Citizens violated TILA, as amended by the FCBA, and Regulation Z
by failing to properly manage and respond to credit card disputes. The
complaint alleges that Citizens automatically denied consumers' billing
error notices and claims of unauthorized use in certain circumstances.
The complaint further alleges that Citizens failed to
[[Page 55840]]
fully refund finance charges and fees when consumers asserted
meritorious disputes or fraud claims and failed to send consumers
required acknowledgement letters and denial notices in response to
billing error notices.
The Bureau further alleges that for several years Citizens violated
TILA by violating provisions passed under the CARD Act. The Bureau
alleges that Citizens violated TILA and Regulation Z by failing to
provide credit counseling referrals to consumers who called Citizens'
toll-free number designated for that purpose. These alleged violations
of TILA--including those under the FCBA and the CARD Act--and
Regulation Z also constitute violations of the Consumer Financial
Protection Act.
The Bureau's complaint seeks, among other remedies, an injunction
against defendants and the imposition of civil money penalties.
5. Signing Authority
The Director of the Bureau, having reviewed and approved this
document, is delegating the authority to electronically sign this
document to Laura Galban, a Bureau Federal Register Liaison, for
purposes of publication in the Federal Register.
Dated: September 4, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-19978 Filed 9-9-20; 8:45 am]
BILLING CODE 4810-AM-P