On January 28, 2021, Acting Director David Uejio of the Consumer Financial Protection Bureau (CFPB) confirmed the CFPB’s new, aggressive approach to enforcement of COVID-19-related matters. Uejio’s statement, posted as a blog, addresses several areas of concern discovered during last year’s Prioritized Assessments, including:
- Mortgage servicers providing inaccurate information about CARES Act forbearances, failing to process forbearance requests, and collecting late fees from borrowers placed on a forbearance;
- Auto loan servicers withdrawing money from accounts of consumers in deferment; and
- Furnishers of consumer credit information failing to accurately report information consistent with the Fair Credit Reporting Act (FCRA) as amended by the CARES Act.
It is clear the tone of the CFPB has already evolved from last year’s more flexible approach to enforcement to a more urgent and less forgiving approach. Uejio warns that the Supervision, Enforcement, Fair Lending (SEFL) Division will be expediting enforcement investigations relating to COVID-19 “to ensure that industry gets the message that violation during this time of need will not be tolerated.” In addition to issues related to COVID-19, Uejio identified racial equity as a top priority for the CFPB. The CFPB’s focus on racial equity is consistent with government-wide priorities, as the Biden administration has emphasized the pressing need to soften the economic impact of the COVID-19 crisis and simultaneously address racial equity.
Uejio’s statement puts all furnishers of consumer credit information, including mortgage and student loan servicers, on notice of increased CFPB action. While historically, civil lawsuits under the FCRA far outnumber agency actions, the CFPB may be gearing up to crack down on FCRA reporting violations. Under the FCRA as amended by the CARES Act, furnishers who make an accommodation for a consumer because of COVID-19 are required to do the following:
- If the account was current before the accommodation, report the account as “current;” and
- If the account was delinquent before the accommodation, (1) maintain the delinquent status during the accommodation period, and (2) update the status to current if the consumer brings the account current during the accommodation period.
Previously, the CFPB issued guidance indicating a flexible approach to furnisher timelines for investigating consumer disputes during the COVID-19 pandemic. However, with the transition to new CFPB leadership, furnishers should take care to strictly adhere to the 30-day investigatory window prescribed by the FCRA.
The consumer finance regulatory landscape is quickly evolving. In fact, the statements by Acting Director Uejio indicate that changes at the CFPB will not wait for a confirmed director. Industry participants should take this time to assess their risks, particularly as they relate to COVID-19. As we previously discussed, mortgage servicers and others subject to the Prioritized Assessments should carefully review any findings they received in addition to the Supervisory Highlights. As always, we will continue to monitor issues raised by the CFPB and other regulatory bodies in order to identify priority areas of concern.