MReport January 2022

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M R EP O RT | 37 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T CFPB Examines Servicer Practices in Latest Report The pandemic brought with it a surge of forbearances, as the CFPB cracked down on servicer regulation, as many of the nation's homeowners struggled. T he Consumer Finan- cial Protection Bureau (CFPB) has issued its latest Supervisory High- lights Report, taking a closer look at the Bureau's public enforcement actions in the first half of 2021. "Today's report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic," CFPB Director Rohit Chopra said. "We will continue to supervise firms to halt harmful practices before they become widespread." Paramount to the CFPB this year was the Bureau's focus on mortgage servicing supervision due to the mounting number of forbearance requests due to the pandemic. While the CARES Act prohibits mortgage servicers from imposing fees on consumers receiving CARES Act forbearance, CFPB examiners found that mort- gage servicers still charged borrow- ers late fees and default-related fees. These illegal fees compounded the financial issues faced by struggling homeowners in 2021, and examin- ers found that some servicers failed to refund these fees until nearly one year later. "The injury was also wide- spread and impacted a large num- ber of borrowers. Borrowers could not reasonably avoid the injury because they could not anticipate that the mortgage servicers would assess unlawful fees and borrow- ers had no reasonable means to avoid imposition of the fees," said the report. "Charging the illegal fees did not provide any counter- vailing benefit to consumers or competition. In response to these findings, the mortgage servicers remediated impacted borrowers and corrected credit reporting to accurately reflect the current bal- ance and amount past due." In addition to its focus on servicers, the CFPB identi- fied several violations of the Equal Credit Opportunity Act (ECOA) by mortgage lenders. The examination team found that mortgage lenders discriminated against African American and female borrowers in the granting of pricing exceptions, compared to non-Hispanic white and male borrowers. Specifically, examiners found lenders lacked oversight and control over how mortgage loan officers granted pricing exceptions to customers. Examiners identified lenders with statistically signifi- cant disparities for incidences of pricing exceptions for African American and female applications compared to similar non-Hispanic white and male borrowers. CFPB examiners also found that lenders improperly consid- ered small business applicants' religion in their credit decisions. For religious institutions apply- ing for small business loans, some lenders improperly utilized a questionnaire that contained ex- plicit inquiries about an applicant's religion.

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