On November 6, the CFPB announced that it now will formally accept borrower complaints regarding payday loans through its online complaint portal and by phone. The CFPB’s complaint taking process launched with the Bureau in July 2011, and the CFPB began publishing complaints through its online complaint database in June 2012. The CFPB started with credit card complaints and has since expanded the complaint program and public database to cover mortgages, debt collection, credit reporting, student and other consumer loans, and other products and services. Read more…
On November 12, the CFPB announced a partnership with the City of Columbus to provide local residents access to the CFPB’s consumer complaint hotline through the city’s existing constituent service hotline. Columbus residents who call the city hotline with a question or complaint about consumer financial products or services will be transferred directly to the CFPB for assistance. The CFPB announced a similar partnership with the City of St. Louis, Missouri on October 31, and has established relationships with numerous other localities in the past, including Newark, New York, Boston, and Jackson.
On October 28, HUD issued two mortgagee letters related to the servicing of certain FHA-insured loans. Mortgagee Letter 2013-38 provides a list of the first legal actions necessary to initiate a foreclosure and the reasonable diligence timeframes for completing foreclosure and acquisition of title in each state. The letter also outlines acceptable delays in those timeframes due to mediation or bankruptcy, or when a separate legal action is necessary to acquire possession of the title. In addition, the letter provides a new schedule of allowable attorney fees by state for services performed in connection with a mortgage default. The updated reasonable diligence timeframes apply to all cases in which the first legal action to initiate foreclosure occurs on or after November 1, 2013. The updated attorney fees are effective for all cases in which certain actions occur on or after November 1, 2013. Mortgagee Letter 2013-39 updates the timelines servicers must follow for collection communications, advises servicers regarding early engagement in loss mitigation, outlines staffing requirements to support timely borrower communications, and provides guidance on the timing, content, and method of delivery for collection letters and other borrower communications. This letter also advises servicers to pay special attention to borrowers at risk of early payment default and re-default, and provides specialized collection techniques for such borrowers. Finally, this letter details the FHA’s expectations for escalating borrower inquiries and complaints that allege (i) improper analysis of borrower information or denials of loss mitigation options, (ii) foreclosures initiated or continued in violation of HUD’s policy, or (iii) any other violations of HUD collections and loss mitigation policies. This guidance is effective for all mortgages in default as of January 1, 2014.
On September 20, the CFPB announced a partnership with the City of Jackson, Mississippi, to accept and respond to questions and complaints about financial products and services posed directly to the Bureau by local residents. The agreement will allow Jackson consumers to dial a local hotline and be connected with the CFPB’s Consumer Response team, which will screen complaints for completeness, jurisdiction, and non-duplication. This agreement is one of several the CFPB has entered with localities around the country and is at least the second time that the CFPB has partnered with a locality on a consumer complaint hotline. The CFPB is currently accepting complaints regarding credit cards, mortgages, deposit products and services, consumer loans, private student loans, credit reporting, debt collection, and money transfers.
On June 26, the CFPB announced that its next field hearing will focus on debt collection and will be held in Portland, Maine on July 10, 2013. The event, which is open to members of the public who RSVP, will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups and industry representatives. In the past, the CFPB has made policy announcements in connection with field hearings, and this time may announce, among other things, that it will begin accepting debt collection complaints through its public complaint database.
On June 18, the CFPB announced a partnership with the City of Boston to provide local residents access to the CFPB’s consumer complaint hotline through the city’s existing constituent service hotline. Boston residents who call the city hotline with a question or complaint about consumer financial products or services will be transferred directly to the CFPB for assistance.
CFPB Releases Consumer Reporting and Money Transfer Complaints, Expands Complaint Database Functionality
On May 31, the CFPB published for the first time consumer complaints about credit reporting, which the CFPB began accepting in October 2012, and money transfer complaints, which it began accepting in April 2013. The CFPB also announced that all complaints in its consumer complaint database now include a field for the state from which the complaint was filed. That field allows the CFPB to report, for example, that the top states for per capita mortgage complaints are (i) New Hampshire, (ii) Maryland, (iii) the District of Columbia, (iv) Georgia, and (v) Florida.
On May 1, the CFPB’s Office of Servicemember Affairs published its Semi-Annual Complaint Report, which states that the volume of complaints from servicemembers, veterans, and their families has steadily increased since the CFPB first started accepting complaints in July 2011. The report provides limited summary information about the complaints, noting that mortgage complaints predominate, followed by credit card and credit reporting complaints. In a related blog post, the CFPB states that it has received more than 5,000 servicemember complaints to date, and calls again for additional questions or complaints from the entire military community.
Today, the FHFA Office of Inspector General (OIG) issued a report on servicers’ handling of borrower complaints, following an audit to assess FHFA’s oversight of Freddie Mac’s controls over servicers’ handling of escalated cases. Under the Servicing Alignment Initiative (SAI), servicers are required to track the escalated cases they receive – specifically defined to include any of five categories of complaints – and resolve those cases within 30 days. In addition, Freddie Mac’s Servicing Guide requires servicers to report monthly on escalated cases status, including when received and how resolved. According to the report, the audit revealed that (i) most of Freddie Mac’s servicers are not complying with reporting requirements for escalated cases, (ii) Freddie Mac’s oversight of servicer compliance has been inadequate, and (iii) the FHFA did not identify the foregoing problems through its own examination of Freddie Mac’s implementation of the SAI. In response, the OIG recommends that FHFA (i) ensure that Freddie Mac requires its servicers to report, timely resolve, and accurately categorize escalated cases, (ii) ensure that Freddie Mac enhances its oversight of its servicers through testing servicer performance and establishing fines for noncompliance, and (iii) improve its oversight of Freddie Mac by developing and implementing examination guidance related to testing the implementation of directives. Following receipt of the report, House Oversight Committee Ranking Member Cummings (D-MD) called for a hearing on borrower complaint handling by servicers.
On March 11, the CFPB announced a field hearing about its Consumer Complaint Database, to be held in Des Moines, IA on March 28, 2013. The CFPB has not yet announced witnesses but has stated the event will feature remarks from CFPB Director Richard Cordray, as well as testimony from consumer groups, industry representatives, and members of the public. The CFPB currently accepts complaints regarding credit cards, mortgages, bank accounts and services, auto/consumer loans, student loans, and consumer reporting, but so far has only published the credit card complaints in the public database. In the past, the CFPB has made policy announcements in connection with field hearings. Accordingly, the CFPB may announce that it is making additional types of complaints publicly available, or that it will accept complaints regarding an additional product or service.
On February 21, Joseph Smith, Jr., the Monitor charged with overseeing the borrower relief and servicing standards aspects of the national mortgage servicing settlement, issued an implementation status report. The report states that the servicers subject to the agreement have provided nearly $46 billion of borrower relief to date and that one of the five servicers has been certified as having satisfied its borrower relief obligations under the settlement. The report notes that, effective January 1, 2013, each of the five servicers’ compliance with the servicing standards are being measured against a set of 29 metrics. The report does not provide any initial assessment of servicer compliance, but notes that the Monitor is currently reviewing each servicer’s compliance review report and, after completing a consultation process with each servicer and the Monitoring Committee, the Monitor will file a compliance report during the second quarter of 2013. The report also notes an increase in consumer complaints collected by the Monitor to date, but does not conclude whether the increase is due to greater awareness about the settlement or persistent servicing problems.
On February 7, the CFPB announced that, through a pilot partnership with Newark, New Jersey, the CFPB will accept and respond to questions and complaints about financial products and services posed directly to the Bureau by local residents. The agreement will allow Newark consumers to dial a local hotline and be connected with the Consumer Response team, which will screen complaints for completeness, jurisdiction, and non-duplication. As with consumer complaints submitted to the CFPB through other channels, hotline complaints from Newark residents that meet the initial screening criteria will be sent to the subject company for review. These companies are expected to respond within 15 days, and to close most complaints within 60 days. Consumers lodging a complaint via the hotline can log into the CFPB’s website to check the status of their complaint and to provide feedback about the company’s response. The CFPB currently is accepting complaints regarding credit cards, mortgages, deposit products and services, consumer loans, student loans, and credit reporting.
On December 11, the CFPB announced plans to share consumer complaint data with state regulatory agencies. The CFPB explained that it is providing “real-time access” to its database of consumer complaints in a manner that will protect any personally-identifiable information. Further, the CFPB plans in the future to accept such information from state agencies, and to make data available to other federal agencies, state attorneys general, local agencies, congressional offices, and other governmental organizations like the California mortgage settlement monitor and the national mortgage settlement monitor. This announcement follows a December 6, 2012 Statement of Intent issued by the CFPB in which it describes how it is coordinating broader information-sharing efforts with state banking and financial services regulators, including with regard to enforcement matters.
CFPB Ombudsman Issues First Annual Report, Makes Recommendation Regarding CFPB Supervisory Examination Process
On November 30, the CFPB Ombudsman’s Office submitted its first annual report to the Director of the CFPB. It describes the establishment of the office and highlights the office’s activities from July 2011 through September 30, 2012. The report also identifies two “systemic issues” that the Ombudsman reviewed: (i) consumer understanding of the CFPB complaint process and (ii) the presence of enforcement attorneys at supervisory examinations. Almost 40 percent of the questions the Ombudsman received from consumers related to the CFPB complaint process, so the Ombudsman recommended that the CFPB provide more information to the public about the complaint process using multiple methods to communicate that information. The Ombudsman also heard concerns regarding the CFPB’s policy that enforcement attorneys participate in supervisory examinations. After conducting her own review, the Ombudsman recommended that the CFPB review its implementation of the policy, and until that review is complete, establish ways to clarify the enforcement attorney role at the supervisory examination.
On November 7, the U.S. District Court for the Middle District of Florida held that numerous factual issues prevented the court from granting summary judgment on the FTC’s claims that an online payday loan referral business engaged in unfair and deceptive billing practices and failed to provide adequate disclosures. FTC v. Direct Benefits Group, LLC, No 11-1186, 2012 WL 5430989 (M.D. Fla. Nov. 7, 2012). The FTC alleges that the defendants violated the FTC Act by obtaining consumers’ bank account information through payday loan referral websites and debiting their accounts without their consent. The FTC also alleges that the defendants failed to adequately disclose that, in addition to using consumers’ financial information for a payday loan application, they would use it to charge them for enrollments in unrelated programs and services. Although it acknowledged that the FTC had presented substantial evidence regarding consumer complaints about the defendants’ activities, the court held that because the defendants maintain that no consumer could be enrolled in the programs without at least clicking an “okay” button on the defendants’ websites, the FTC was not entitled to summary judgment. A bench trial is scheduled for November 27, 2012, during which the parties will present additional evidence and arguments regarding the content and operation of the websites and whether consumers could enroll in the referral programs without taking affirmative steps to do so.