CFPB Supervisory Highlights Note UDAAP Violations

The Consumer Financial Protection Bureau (CFPB) released its Winter 2019 Supervisory Highlights recently, detailing issues currently on the bureau’s radar, as well as enforcement trends credit unions should be mindful of.

The newsletter contains lots of discussion around Unfair, Deceptive or Abusive Acts or Practices (UDAAP), most notable in auto loan servicing mortgage servicing and deposits.

  • Auto loan servicing: The CFPB reports several UDAAP instances regarding rebates for ancillary products such as extended warranties. The report notes instances of servicers using the wrong mileage amounts to calculate the rebate for extended warranty cancellations.  It also found instances where services did not request rebates for eligible ancillary products on behalf of a borrower after a repossessions or total loss;
  • Deposits: The CFPB reported unfair practices in which consumers were given the opportunity to select their bill-pay date on certain payments, but the institutions failed to notify consumers that their bill-pay payments could be debited on a sooner date than the date selected if payment was made via paper check. This led to some overdraft fees; and
  • Mortgage servicing: The CFPB reports servicers charging unfair late fees greater than the amount permitted in the note by state law. It also notes UDAAP related to private mortgage insurance (PMI) cancellation as certain borrowers reached 80% loan-to-value ahead of schedule due to making extra payments.  These borrowers were denied their request to cancel PMI, thus the servicer misrepresented conditions of PMI removal.

Other notable parts of the report include several Public Enforcement Actions show a trend of the CFPB going after payday and other small dollar lenders, a Fair Credit Reporting Act violation against a bank for furnishing inaccurate information to Credit Reporting Agencies and more.

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