CFPB Enforcement Action Trends to Watch Closely
The Consumer Financial Protection Bureau released a supervision report in March that highlighted the agency's enforcement action and other supervisory activities between July 2014 and December 2014. The CFPB noted that its supervisory activities during this period resulted in remediation to consumers in the amount of $19.4 million.
The CFPB also identified the five main issue areas and trends of supervisory activity during this period. These identified areas of supervisory activity indicate the CFPB's priority areas for review and enforcement. Notably included are Unfair, Deceptive, or Abusive Acts or Practices issues, handling and tracking of consumer disputes and complaints; LO compensation, and weak compliance management systems resulting in technical disclosure and advertisement violations and fair lending. The CFPB is signaling that it will continue to actively enforce and regulate all subject matter areas under its purview.
All areas identified by the CFPB in its supervisory report have particular relevance to the mortgage industry, and lenders should review their compliance management systems as well as compliance with the large-scale subject matter areas that the CFPB is committed to enforcing, the key areas of which are fair lending policies; regression analysis on Home Mortgage Disclosure Act data; LO compensation agreements to ensure loan officers are paid compliantly and no compensation structure circumvents the spirit of the LO Compensation Rule; complaint handling and tracking policies; all company policies and procedures to ensure accuracy and clarity to avoid possible UDAAP claims; all marketing relationships for compliance with RESPA; and all mini-correspondent channels to ensure compliance with the CFPB's guidance regarding mini-correspondents published this past summer. Proactive implementation and the establishment of strong internal controls can help lenders mitigate their risk of being found in violation of these major targets for CFPB enforcement actions.