The CFPB released its Supervisory Highlights report highlighting problems in the mortgage servicing market during 2013. The report includes information gathered by the CFPB through its supervision program between July and October 2013. Specifically, the CFPB’s report describes several instances where servicers violated the Dodd-Frank Act’s ban on unfair, abusive or deceptive acts and practices. For example, examiners found that two servicers engaged in unfair practices by failing to honor existing permanent or trial loan modifications following a servicing transfer. Examiners also found that two other servicers unfairly required borrowers to agree to overly broad waiver clauses releasing the services from all claims in order to get a forbearance or loan modification agreement. The report also highlights payment processing issues by servicers. For example, a servicer allegedly misrepresented how certain bi-weekly payment plans worked, and another servicer allegedly falsely told borrowers that they would receive funds from their escrow accounts. According to the CFPB, the report makes clear that “mortgage servicing misconduct continued to plague consumers throughout 2013.” In all cases where the CFPB found servicing issues, the servicers were alerted of the CFPB’s concerns and any necessary remedial measures were taken.
The CFPB also announced developments in its supervision program including changes to examination reports and supervisory letters. In particular, the CFPB announced that beginning in January 2014, it was changing the format of its examination reports and supervisory letters sent to supervised entities. In particular, the CFPB plans to eliminate recommendations in the report, and instead, provide recommendations orally when examiners are onsite. The CFPB will also create a single section in the report, “Matters Requiring Attention”, that will include all items the CFPB expects the supervised entity to address when the review identifies violations of law or weaknesses in compliance.