The CFPB Supervisory Highlights – Issue 23 - Winter 2021 indicated several issues that raise the risk of consumer harm. Some categories of issues are described below.Several servicers provided incomplete or inaccurate information to consumers regarding CARES Act forbearances. These issues present a range of potential risks of consumer harm, such as dissuading borrowers from requesting forbearance and causing borrowers to pursue other options that may be less favorable to them than forbearance. Examiners observed instances of the following:
- Customer service representatives provided inaccurate information regarding forbearances, including the available period for CARES Act forbearances and the interest accrued or amounts owed. Servicers told some borrowers that “lump sum” payment of all missed monthly payments would be required at the end of the forbearance period when in fact that was not correct.
- Representatives indicated that only delinquent borrowers could qualify for a forbearance, contrary to the CARES Act.5 As a result, representatives instructed some current borrowers to call back to request forbearance only after they had failed to make an on-time monthly payment.
- Written materials, such as forbearance approval letters and customer service websites, included inaccurate or potentially misleading information regarding CARES Act forbearance. For example, one servicer suggested that consumers had to pay a fee to receive forbearance and another provided incorrect due dates for the borrower’s next payment.
- A servicer sent borrowers requesting CARES Act forbearances written agreements purporting to require a signature as a condition of enrollment and stating that payments would be due later that month, when in fact they would not be due for 90 or 180 days. The CARES Act requires only that borrowers request forbearance and attest to a financial hardship due to the pandemic to qualify.
Several servicers took actions on borrowers’ accounts that were enormous or inconsistent with the fact that borrowers were enrolled in CARES Act forbearances.
Several servicers provided inaccurate information or took actions concerning borrowers’ preauthorized electronic funds transfers without their knowledge or consent. These issues can result in inadvertent missed payments and other negative consequences for consumers.
Some servicers did not take appropriate steps relating to loss mitigation for borrowers in CARES Act forbearances. The risks to consumers from these issues include missed opportunities to pursue and enroll in appropriate repayment options or plans.
Hopefully this will summarize some of the Examiners’ recent concerns regarding CARES Act Servicer Administration.