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CFPB Finds Qualified Students Were Blocked From Affordable Loan Repayment Plans; Updates Student Loan Servicing Exam Procedures
Monday, November 7, 2016 6:40 AM

The Consumer Financial Protection Bureau has announced in its Supervisory Highlights report that recent supervisory actions returned more than $11 million to more than 225,000 harmed consumers.

The CFPB also uncovered student loan servicer violations, such as failing to enroll qualified borrowers in affordable federal loan repayment plans, and is issuing updated procedures for student loan servicing exams. The report also outlines violations found in auto loan origination and servicing, debt collection, and mortgage origination. Additionally, the report provides information on compliance with CFPB rules and regulations, new exam policies, and best practices for better communication with non-English-speaking consumers.

“Our examiners continue to find sloppy or callous practices among some student loan servicers and other financial institutions that violate the law and put consumers at risk,” said CFPB Director Richard Cordray. “If their practices hurt consumers, they need to rethink and change their practices in light of the actions and observations found in this report.”

This 13th edition of Supervisory Highlights is focused on supervisory work generally completed between May and August 2016. It includes issues CFPB examiners found in student loan servicing, auto loan origination and servicing, debt collection, and mortgage origination. Supervisory actions in the areas of deposits, mortgage servicing, and credit cards returned $11.3 million to consumers.  Specific issues uncovered by CFPB examiners being addressed through supervisory or enforcement action include:

  • Student loan servicers unfairly denying or failing to approve qualified students’ affordable payment plans.
  • Auto loan servicers illegally keeping borrowers’ belongings.
  • Debt collectors charging illegal fees, misleading consumers.

Some problems found during CFPB supervisory examinations are resolved without an enforcement action. Where bureau examiners find violations of law or other significant problems or weaknesses, they alert the institution to these concerns, direct the institution to change its conduct, and outline necessary remedies. 

Source: CFPB