The Consumer Financial Protection Bureau (CFPB) alleged Tuesday that mortgage and student loan servicers are engaged in a broad array improper and illegal practices, such as misleading borrowers and inflating minimum payments.
The accusations, outlined but not detailed by the CFPB, follow a review of loan servicers in the two industries initiated as part of the agency’s “supervision program.”
{mosads}“All borrowers should be treated fairly by loan servicers, and through our supervision program, we intend to hold them accountable for how they treat borrowers,” CFPB Director Richard Cordray said.
However, the consumer protection agency is not naming the firms allegedly involved in the illegal activity and is not announcing any enforcement action at this time.
Rather, the CFPB said examiners who uncover violations alert the companies about the concerns. The agency may also open investigations for potential enforcement actions when appropriate, the agency said.
The CFPB’s review focused on firms that service both student and mortgage loans, and found a host of violations in both industries, according to the agency.
Examiners found that “one or more” student loan servicers were allocating payments from borrowers with more than one loan in a manner that maximized late fees and inflating minimum payments owed on some loans.
In other cases, examiners found servicers charging illegal late fees after payments were received during grace periods granted to borrowers, the agency said.
The CFPB also accuse servicers of harassing borrowers with early morning or late night collection calls.
Within the mortgage industry, the examiners allegedly found some cases where servicers unfairly delayed loan modifications for struggling homeowners and others in which they deceived consumers about the status of loan modifications.
The agency is declining to identify the violating firms in keeping with its policy against releasing individual examination findings of reviews conducted under the supervision process.
However, the process can lead to penalties against the firm, and remediation under which consumers harmed by violations may receive compensation, the agency said.