CFPB Issues Supervisory Highlights Summer 2023 Edition

The Consumer Financial Protection Bureau (CFPB) has issued the latest edition of its Supervisory Highlights publication. Available here, the report covers findings from examinations conducted between July 1, 2022, and March 31, 2023. The report reminds financial institutions, among other things, of the following responsibilities under federal law:

Fair Credit Reporting Act / Regulation V

• Furnishers must review their policies and procedures surrounding the accuracy and integrity of information reported to consumer reporting agencies, and update as necessary.
• Creditors must timely investigate and respond to direct disputes concerning alleged inaccurate credit report information. This includes notifying borrowers that their direct dispute has been classified as frivolous or irrelevant by the creditor.

Equal Credit Opportunity Act / Regulation B

• Creditors are prohibited from discriminating against an applicant/borrower based on their race, national origin, sex, age, etc. This includes failing to grant pricing exceptions based on competitive offers from other lenders to members of a protected classification.
• Creditors may not exclude, or discount protected income when underwriting a loan application. Protected income includes income from a retirement source, income from public assistance, and alimony, child support, or separate maintenance income.

Truth in Lending Act / Regulation Z

• Creditors may not compensate mortgage loan originators based on the terms of the transaction. This specifically includes adjusting compensation based on product type, since products are simply a bundle of particular credit terms.
• Lenders are reminded that loan disclosures must reflect the terms of the legal obligation between the parties.

Real Estate Settlement Procedures Act / Regulation X

• Servicers must adhere to specific timing requirements when reviewing applications for loss mitigation assistance from a delinquent borrower.
• Servicers are required to establish continuity of contact with delinquent borrowers by assigning certain personnel to those borrowers within a specific period of time.
• A transferee servicer may not treat a payment sent to the transferor servicer as late for the first 60 days following the transfer of the servicing of a mortgage loan.

Military Lending Act

• In connection with certain credit transactions, lenders must determine whether an applicant is a covered borrower under the Military Lending Act. If yes, the lender must provide additional disclosures and adhere to more specific product limitations and restrictions.