Latest CFPB Supervisory Report Lists Violation Trends for Mortgage Origination and ServicingThe Consumer Financial Protection Bureau (‘CFPB”) has released its latest Supervisory Report for the first four months of 2015 and said it had identified a number of violations by mortgage lenders and servicers that resulted in remediation of $11.6 million to over 80,000 consumers.

“We are extremely concerned that one year after the CFPB’s mortgage servicing rules went into effect we are still finding runarounds and illegal dual-tracking,” said CFPB Director Richard Cordray.

The violation trends highlighted in the Supervisory Report include:

Mortgage Origination

  • Failure to establish written policies and procedures pursuant to the Loan Originator Rule as required under Regulation Z.
  • Failure to comply with Regulation X disclosure requirements regarding the furnishing of housing counseling agencies to consumers.
  • Failure to comply with Regulation X requirements for providing consumers with a Good Faith Estimate (“GFE”) within three days of receiving a completed mortgage loan application and failing to provide a revised GFE to consumers within three days of receiving information of a changed circumstance.
  • Failure to comply with Regulation X requirements for ensuring the HUD-1 settlement statement reflects the actual settlement charges paid by borrowers.
  • Engaging in a deceptive practice by including a general waiver provision in home equity installment loan agreements that could mislead consumers into believing that by signing the note they had waived certain rights guaranteed to them by federal statutes.

Mortgage Servicing

  • Failure to send loss mitigation acknowledgement notices as required by Regulation X, or sending acknowledgement notices requesting additional information inapplicable to the borrower’s circumstances or for documents already supplied by the borrower.
  • Engaging in unfair and deceptive foreclosure process practices, including dual tracking and informing consumers already approved for loan modifications or who were current on their loans that foreclosure was imminent.
  • Failure to provide borrowers with periodic statements for an account’s transaction history as required by Regulation Z.
  • Violations of the Homeowners Protection Act by failing to automatically cancel a borrower’s private mortgage insurance (“PMI”) when the mortgage balance reached 78% of the original value of the property securing the loan and the borrower was current on the loan.

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