Through its supervisory activities, the Consumer Financial Protection Bureau has determined that some mortgage servicers are failing to provide adequate legal protection to struggling borrowers and have therefore violated the law.
According to the Bureau’s Supervisory Highlights report released on Wednesday, CFPB examiners also found that some servicers mishandled escrow accounts, kept borrowers in the dark about their potential foreclosure prevention options, prematurely entered the foreclosure process, and sent incomplete bills and statements.
CFPB examiners also found similar problems with several student loan servicers, stating that many had “failed to refund charges imposed on borrowers who had been wrongly denied the right to defer payments while enrolled in school.”
“We found that some mortgage and student loan servicers are violating the law by failing to provide protections to borrowers,” CFPB Director Richard Cordray said. “Their slipshod practices are putting borrowers at risk of financial failure, and we will hold them accountable."
According to a CFPB release, the Bureau’s non-public supervisory activities have also recovered more than $6 million for consumers ill-served by car lenders, $19 million in civil money penalties, and $39 million in total consumer remediation. The activities also led to five public enforcement actions.
Servicers with home CFPB examiners found issues with will be alerted and informed of potential remedial measures. According to the Bureau, this could include issuing refunds, paying restitution, implementing policies, improving training, increasing monitoring, and other actions to stop illegal practices.
CFPB recently filed suit against Ocwen Financial Corporation, alleging it “engaged in significant and system misconduct at nearly every stage of the mortgage servicing process.” Ocwen responded this morning by filing three motions with the court, hoping to expedite a ruling on the constitutionality of the CFPB itself.
“Ocwen believes that the CFPB is unconstitutionally structured, because it vests too much unfettered power in the hands of the CFPB’s Director and the Bureau itself, without any meaningful oversight by the President or Congress,” a release from Ocwen stated.
The CFPB’s Supervisory Highlights report covered CFPB supervisory activities from September to December 2016. To view the full report, visit ConsumerFinance.gov.