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CFPB releases medical debt report
On April 20, the CFPB released a report analyzing complaints submitted to the Bureau in 2021 regarding medical billing, collection, and consumer reporting practices. The report describes the difficulties that consumers face in identifying, verifying, or eliminating the debt. The report also noted that most of the complaints could be sorted into two main themes: (1) the debt was already paid, does not belong to the consumer in question, or is otherwise incorrect, and (2) that information included in collection notices raised concerns. According to the Bureau, key findings of the report include, among other things: (i) from 2018 to 2021, complaints regarding collection attempts on medical bills that were not owed increased by 31 percent; (ii) approximately 15 percent of debt collection complaints in 2021 were about attempts to collect a medical bill; and (iii) “consumers often expressed surprise and frustration about finding out about old or small medical debts when checking their credit report.” The report is the most recent among statements and reports from the CFPB regarding medical debts and credit reporting. As previously covered by InfoBytes, in March the CFPB released a report, Medical Debt Burden in the United States, that cited research finding that $88 billion in medical debt on consumer credit reports, accounting for 58 percent of all uncollected debt tradelines reported to credit reporting agencies.
HUD announces $15,000 payment for FHA violations
On April 19, HUD announced a conciliation agreement with a national bank and one if its loan officers to resolve allegations that respondents violated the Fair Housing Act (FHA) by denying a mortgage loan to a couple until after one of the applicants returned to work from maternity leave. Under the FHA, it is unlawful to discriminate in the terms, conditions, or privileges associated with the sale of a dwelling on the basis of race, color, national origin, religion, sex, disability, or familial status, including denying a mortgage loan because an applicant is on maternity leave. In addition to requiring a $15,000 payment be made to the couple, the bank must “adhere to a policy wherein applicants on temporary leave, including parental leave, can be approved for a mortgage prior to returning to active work status,” and provide fair lending training to employees. The conciliation agreement does not constitute an admission by respondents or evidence of a finding by HUD of a violation of the FHA.
FTC takes action against day-trading company for deceptive sales techniques
On April 19, the FTC filed a complaint against a day-trading investment company and its CEO alleging the defendants violated the FTC Act and the Telemarketing Sales Rule (TSR) in connection with the company’s investment opportunities. According to the complaint, the Massachusetts-based defendants promote day-trading investments online and sell programs promising to show consumers how to earn substantial profits in a short time period. The FTC contends that the defendants promote these so-called “profitable” and “scalable” trading strategies to consumers through allegedly deceptive sales pitches and inform consumers that their strategies are effective even with initial investments as small as $500. However, the FTC claims that 74 percent of customers’ accounts actually lost money and that only 10 percent of the accounts earned more than $90.
Under the terms of the proposed stipulated order, the defendants are required to pay $3 million in consumer redress and are permanently restrained and enjoined from making unsubstantiated earnings claims concerning consumers’ potential to earn money using their trading strategies regardless of the amount of capital invested or the amount of time spent trading. Defendants are also prohibited from violating federal law, or from making any misrepresentations about investment opportunities, including misrepresentations in connection with telemarketing regarding the amount of “risk, liquidity, earnings potential, or profitability of goods or services that are the subject of a sales offer.”
CFPB reports on rural banking deserts
On April 19, the CFPB released a report regarding the challenges faced by Americans in rural communities. According to the report, in 2012, over 600 counties “had no other physical banking offices except those operated by community banks.” The report also noted that bank consolidation has contributed to the expansion of “rural banking deserts,” which the Federal Reserve Bank of St. Louis defines as “census tracts in which there are no branches within a 10-mile radius from the tracts’ centers.” The CFPB report identified lack of broadband access and lower access to smartphones as limiting factors to banking access. It also provided a snapshot of economic challenges facing rural people and communities, including: (i) rural communities have lower incomes and higher poverty rates than the rest of the country; (ii) lower likelihood of having a credit record; and (iii) nearly 1-in-5 U.S. households have past-due medical bills.
Senators warn CFPB of student loan servicers’ mismanagement of IDR programs
On April 14, Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Richard J. Durbin (D-IL) sent a letter to CFPB Director Rohit Chopra urging the Bureau to investigate recent reports of student loan servicers mismanaging income-driven repayment (IDR) programs. The letter alleged that servicers have failed to properly count qualifying payments or accurately track borrowers’ progress towards cancellation. Specifically, the senators noted that servicers’ mismanagement is affecting the lowest-income borrowers the most, citing report findings that 48 percent of IDR borrowers are eligible for $0 monthly payments that can be counted towards loan forgiveness, but are not being tracked. In addition, IDR cancellation requires servicers to “proactively notify borrowers when they are within six months of qualifying for loan cancellation”—a process that requires servicers to accurately count payments and properly track borrowers’ progress. According to the senators, “out of 4.4 million eligible borrowers, recent reports indicate that only 32 borrowers have ever had their student loans canceled through IDR.”
HUD offers 40-year mortgage modification
On April 18, HUD issued Mortgagee Letter 2022-07, which establishes a 40-year loan modification as part of the Covid-19 Recovery Loss Mitigation Options. According to HUD, the new option is “designed to help those borrowers who cannot achieve a minimum targeted 25 percent reduction in the Principal and Interest portion of their mortgage payment through FHA’s existing 30-year mortgage modification with a partial claim.” Mortgage servicers may start implementing the new 40-year modification with partial claim option immediately; however, servicers must offer this solution to eligible borrowers with FHA-insured Title II forward mortgages, except those funded through Mortgage Revenue Bonds under certain circumstances, within 90 calendar days. As previously covered by InfoBytes, HUD published a proposed rule to increase the maximum term limit allowable on loan modifications for FHA-insured mortgages from 360 to 480 months. Comments are due by May 31.
CFPB questions transcript withholding as a debt collection practice
On April 18, the CFPB announced it is examining the practice of transcript withholding as a debt collection practice. According to a Bureau blog post, many post-secondary institutions choose to withhold official transcripts from borrowers as an attempt to collect education-related debts ranging from student loans to library fines. “Withholding transcripts as a debt collection tactic is particularly perplexing, as it can undermine rather than enhance a student’s likelihood of repaying,” the Bureau said, noting that this practice can cause students to become stuck in a cycle of collections. As previously covered by InfoBytes, the Bureau announced in January that it plans to examine the operations of post-secondary schools that extend private loans directly to students and that are not subject to the same servicing oversight as other lenders and servicers. The Bureau noted that it is “concerned about the borrower experience with institutional loans because of past abuses at schools,” high interest rates, and debt collection practices.
HUD outlines plan for reducing the racial homeownership gap
On April 14, HUD released its first ever Equity Action Plan (the Plan) to address procurement and resources for the agency’s Office of Fair Housing and Equal Opportunity in coordination with President Biden’s 2021 Executive Order 13985 on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.” Among other things, the Plan requests funding increases to process, investigate, and resolve fair housing complaints and “to improve capacity to pursue Secretary-initiated investigations and compliance reviews” that do not necessarily stem from public complaints. The Plan also outlines HUD’s approach to reducing the racial homeownership gap, including future rulemakings to implement the Fair Housing Act’s mandate to Affirmatively Further Fair Housing (covered by InfoBytes here) as well as other actions to promote equity. HUD also plans to engage in a range of actions in partnership with federal and non-federal organization to maximize homeownership for creditworthy first-time homebuyers and preserve homeownership for existing homeowners. This includes (i) “improving the efficiency of the [Federal Housing Administration] program by leveraging technologies and removing perceived bias of the program so individuals, lenders, and others can use it more with first time, lower income home buyers”; (ii) increasing outreach to non-traditional lenders; and (iii) considering ways “to increase the availability of small-dollar mortgage loans by addressing the financial and operational barriers limiting origination of these loans.” HUD intends to continue to monitor data on borrowers to determine statistical changes in Black and Hispanic households that access FHA-insured loans and the rest of the mortgage market, and will track FHA lending activity in underserved markets.
OCC issues final rule on authority for SAR requirements
On April 14, the OCC issued a bulletin reminding regulated banks of a final rule amending the agency’s suspicious activity report (SAR) regulations. The final rule takes effect May 1 (covered by InfoBytes here). Generally, the final rule clarifies the processes by which the OCC may issue exemptions from the requirements of the SAR regulations “based on a request … [for an exemption] that meets the criteria specified in the final rule.” The bulletin notes, however, that the final rule does not itself create any exemptions from the SAR regulations.
CFPB updates list of institutions under its authority
Recently, the CFPB updated its list of Depository institutions (DIs) and depository affiliates of DIs under its supervisory authority. The CFPB has supervisory authority over banks, thrifts, and credit unions with assets over $10 billion, as well as their affiliates. The list is based on total assets as of December 31, 2021.