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CFPB FINDS VIOLATIONS
OF CONSUMER FINANCIAL
LAWS AMONG LENDERS
The Consumer Financial Protection Bureau
(CFPB) released a Supervisory Highlights
report, providing an overview of actions
between July 2011 and September 2012. The
report shows the agency found several instances
in which financial institutions did not adhere to
federal consumer financial laws.
CFPB's supervisory reach extends over banks
holding in excess of $10 billion in assets, as well
as their affiliates; nonbanks that offer mortgagerelated services, private education loans, or
payday loans; and other "larger participants" and
nonbanks designated by the bureau.
With regard to mortgage providers and
originators, the CFPB pointed out a few specific
areas of concern, adding that its examiners
"noted instances of significant non-compliance."
With regard to the Real Estate Settlement
Procedures Act, the CFPB noted instances
in which institutions did not properly disclose
transaction costs and did not properly complete
good faith estimates and HUD-1 settlement
statements.
The CFPB also noted violations of the Truth
in Lending Act, including failure to provide
consumers with accurate interest rates, payment
amounts and schedules, late payments, security
interests, and assumption policies.
Some mortgage originators also did not
comply with the Home Mortgage Disclosure
Act (HMDA), which requires them to report
certain information to regulators and the public.
The CFPB relies on HMDA data to determine
whether credit is being provided fairly.
Across all regulated entities, the CFPB
found cases of "deficient compliance
management systems" and failure to "effectively
manage service providers acting on [their]
behalf." The CFPB has requested institutions
in violation of federal consumer compliance
laws take corrective action. The agency has
also required payment of $435 million to about
5.7 million consumers who were harmed by
violations.
Along with the release of its Supervisory
Highlights report, the CFPB announced a new
appeals process for financial institutions that
do not agree with the CFPB's assessment and a
new manual for the examiners acting on behalf
of the agency.
KNOW THIS
Median household income fell
5.7% from June 2009, the official
end of the recession, to August
2012, Sentier Research reports.
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