CFPB Monthly Complaint Report Highlights Issues Related to Mortgages

On April 26, the CFPB issued its latest installment of reports covering consumer complaints. According to this month’s report, the CFPB has, as of April 1, handled more than 859,000 complaints across all products, with mortgage complaints accounting for approximately 223,100, making it the second most-complained about product after debt collection. Key findings from the report include the following: (i) approximately 51% of mortgage-related complaints relate to consumers encountering problems when they were having difficulty making payments, such as facing prolonged loss mitigation review processes and receiving conflicting and confusing foreclosure notifications during loss mitigation assistance review; (ii) consumers facing issues involving transfers of their loan to another servicer without being properly informed of the transfers; (iii) loan servicers allegedly providing confusing and contradictory information regarding reinstatement amounts, charges and fees, and interest rates; (iv) loan servicers delaying the release of insurance claim funds allocated to property damages despite consumers having provided all required documentation; and (v) consumers facing prolonged and confusing loan origination processes, resulting in the loss of favorable interest rates and the expiration of rate locks. Consistent with past reports, this month’s issue lists the top 20 most-complained-about companies for mortgage-related complaints, as well as the top ten most-complained-about companies across all financial products. Finally, with more than 118,000 complaints submitted from the state’s consumers as of April 1, the report identifies California as its geographical spotlight, noting that complaints from the state have “generally followed the national trend.”

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CFPB to Host Field Hearing on Arbitration

On May 5, the CFPB will host a field hearing on arbitration in Albuquerque, New Mexico. Last October, the CFPB assembled its Small Business Review Panel to review proposals to limit pre-dispute arbitration agreements for consumer financial products and services, signaling preliminary stages of the anticipated proposed rulemaking. The May 5 hearing will be the CFPB’s third field hearing on arbitration; the first was in March 2015 and the second in October 2015.

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CFPB Releases Draft Payback Playbook, Aims to Aid Student Borrowers

On April 28, the CFPB released a draft set of student loan disclosures, the Payback Playbook. Outlining repayment options for student loan borrowers, the Payback Playbook is intended to help borrowers effectively manage their monthly payments and avoid default. The Payback Playbook will be available on borrower’s monthly bills, in regular email communications from student loan servicers, or when borrowers log into their accounts. The Payback Playbook for most borrowers would summarize three personalized repayment options, while borrowers who are at risk of default or have missed a payment will receive a “single option with personalized instructions written in plain language describing how to lower their monthly payment.” The CFPB held a press call during which Director Cordray addressed the key objectives of the Payback Playbook, including: (i) aid federal student loan borrowers by personalizing income-driven repayment plans and providing a chart of action to ensure that consumers understand their right to an affordable payment plan; (ii) address the “growing disconnect between borrowers searching for affordable loan payments and [the] nation’s student loan default problem”; and (iii) address consumers’, student loan servicers’, consumer advocates’, and borrowers’ “most urgent problems.”

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CFPB Takes Action Against Law Firm, its Partners, and Debt Buyer for Alleged FDCPA Violations

On April 25, the CFPB issued separate consent orders to a New Jersey-based law firm and two of the firm’s partners and a New Jersey-based debt buyer for alleged violations of the FDCPA and the Dodd-Frank Act. According to the CFPB, between 2009 and 2014, the law firm, which specializes in retail debt collection litigation, filed lawsuits on behalf of the debt buyer without having “sufficient documentation” to support “the original contracts underlying the alleged debts, documentation of the consumer’s alleged obligation, or the chain of title evidencing that the debt buyer actually owned the debt and thus had standing to sue the consumer.” The CFPB alleges that, among other things, (i) the law firm relied on an automated system and non-attorney staff to complete the initial review of data submitted by the debt buyer regarding consumers’ debt accounts; (ii) the debt buyer failed to require that the law firm complete an account-level review of the documents it submitted prior to filing suit; (iii) neither the debt buyer nor law firm obtained sufficient documentation evidencing the alleged debt and its transactional history; and (iv) the debt buyer and law firm collected debts and filed suits based on unreliable data. The CFPB further contends that the named partners had “managerial responsibility for the Firm and materially participated in the conduct of its debt-collection litigation practices.” In addition to the $1 million civil money penalty imposed on the law firm and the two partners and the $1.5 million civil money penalty imposed on the debt buyer, the consent orders prohibit the firm, the two named partners, and the debt buyer from filing suits or threatening to file suits without substantial evidence that the debt is accurate and enforceable and from using deceptive affidavits, including those that misrepresent the type of documentation reviewed and that the review was conducted by the actual person signing the affidavit.

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CFPB Proposes Amendments to Mortgage Servicing Rules Under RESPA and TILA

On April 26, the CFPB published a proposed rule regarding potential amendments to certain mortgage servicing provisions in RESPA (Regulation X) and TILA (Regulation Z). The recently issued proposed rule reopens the comment period of a December 2014 CFPB proposal that would require mortgage servicers to “provide modified periodic statements under Regulation Z to consumers who have filed for bankruptcy, subject to certain exceptions.” Since the December 2014 proposal, the CFPB has conducted consumer testing of sample periodic statement forms for consumers in bankruptcy. The CFPB is reopening the comment period until May 26, 2016 to “seek comment specifically on the report summarizing consumer testing of sample periodic statement forms for consumers in bankruptcy.”

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