In April, the CFPB released their Spring 2017 Supervisory Highlights, which outlines some of the concerns they are seeing during their exams. Not surprisingly, the focus is on mortgage servicing, student loan servicing, mortgage origination, and fair lending, which seem to be a common theme anytime the CFPB is involved.
Regarding mortgage origination, the CFPB touches on the Ability to Repay rule, noting that while a creditor can potentially use verified assets (other than the dwelling itself) to offset what may otherwise be a negative income, a down payment cannot be considered an asset, since it is not available for future payments. There’s also discussion of seemingly ongoing RESPA Section 8 violations, with the CFPB issuing a reminder that both parties making and receiving payments for the referral of settlement services are in violation.
“Serious problems” with loss mitigation appear to be the highlight when it comes to mortgage servicing, as well as issues with dual tracking (foreclosure filing without evaluating a complete loss mitigation application submitted by the borrower), escrow accounts, and periodic statements that inadequately describe charges, using phrases such as “Charge for Service”.
The CFPB also reiterates the importance of service provider oversight as part of any compliance management system noting its initial focus is on those directly impacting mortgage origination and servicing. It will be interesting to see what tangible impact, if any, the CFPB will have here.