The results indicated some concerns related to servicing fees and loan forbearance along with fair lending issues.
The CFPB found that some servicers were charging excessive fees for loan forbearances as well as failing to provide accurate information about loan terms. This could result in borrowers being surprised when they find out they have to pay a higher price for their loans than they thought. Additionally, some servicers and lenders were not consistently applying their policies when it came to granting loan forbearance requests, which could result in an increased risk of discrimination.
In order to combat these issues, the CFPB recommends that servicers and lenders provide clear, specific information to consumers upfront about any fees and terms associated with loan forbearance. They also suggest that servicers and lenders adopt consistent practices for granting loan forbearance requests and that they take steps to ensure that borrowers are not charged more than necessary for fees or higher interest rates.
The CFPB has also noted that additional analysis is needed to further investigate potential disparities in access to loan forbearance across demographic groups. They suggest that servicers and lenders monitor data related to this to identify any potential patterns of discrimination.
In summary, the CFPB's recent examinations highlighted some concerns around servicing fees and loan forbearance. The CFPB has recommended that servicers and lenders provide clear, specific information to consumers upfront about any associated fees and terms, and adopt consistent policies for granting forbearance requests. They also suggest that servicers and lenders monitor data to identify any potential disparities in access to loan forbearance across demographic groups. By taking these steps, servicers and lenders will be able to better protect consumers while minimizing potential discrimination.
This article was contributed on Dec 14, 2023