CFPB Supervision Report Highlights Risky Practices in Student Loan Servicing

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Examiners Also Uncover Violations of Mortgage Servicing Laws

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today issued a report highlighting illegal actions uncovered by the Bureau’s supervision of the student loan servicing market. Bureau examiners found that companies engaged in illegal practices like charging unfair late fees and harassing debt collection calls. Bureau examiners also found that some mortgage servicers failed to provide critical consumer protections required by the new CFPB servicing rules that took effect earlier this year.

“Students are already struggling with crushing amounts of loan debt,” said CFPB Director Richard Cordray. “Student borrowers deserve better than illegal practices as they work to pay back their loans. All borrowers should be treated fairly by loan servicers, and through our supervision program, we intend to hold them accountable for how they treat borrowers.”

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the CFPB has authority to supervise banks with over $10 billion in assets and certain nonbanks. Those nonbanks include mortgage companies, private student loan lenders, and payday lenders, as well as nonbanks the Bureau defines through rulemaking as “larger participants.” To date, the Bureau has issued rules to supervise the larger participants in the debt collection, consumer reporting, international money transfer, and student loan servicing markets.

Today’s report, which is the fifth edition of Supervisory Highlights, generally covers supervisory activities between March and June 2014. The report highlights problems in two specific markets: student loan servicing and mortgage servicing. Servicers are companies that collect payments on a loan, respond to customer service inquiries, and perform other administrative tasks associated with maintaining a loan. Further, loan servicers disburse loans, process deferments and forbearances, and maintain loan records. Servicers are also responsible for working with struggling borrowers to find repayment options.

Student Loan Servicing

More than 40 million Americans with student debt depend on student loan servicers to serve as their primary point of contact about their loans. When facing unemployment or other financial hardship, borrowers contact student loan servicers in order to enroll in alternative repayment plans, obtain deferments or forbearances, or request a modification of loan terms. While supervising for compliance with federal consumer financial laws, Bureau examiners found that one or more student loan servicers were:

  • Allocating payments to maximize late fees: Typically, servicers handle multiple student loans for each borrower in one combined account. Servicers allow borrowers to make a single payment for all of the loans, and then the servicer allocates the payment among the borrower’s loans to satisfy the monthly payment for each loan. Where the borrower made a payment that was less than the total amount due, CFPB examiners found that one or more servicers allocated the amount proportionally to each loan. That resulted in borrowers getting charged a minimum late fee on all of their loans and all of their loans becoming delinquent. Supervision cited these fee-maximizing practices as unfair under the Dodd-Frank Act.

  • Misrepresenting minimum payments: CFPB examiners found that one or more servicers inflated the minimum payment that was due on periodic statements and online account statements. These inflated numbers included amounts that were in deferment and not actually due, which CFPB examiners found to be deceptive.

  • Charging illegal late fees: CFPB examiners found one or more servicers were unfairly charging late fees when payments were received during the grace period. Like many other types of loans, many student loan contracts have grace periods after the due date. If a payment is received after the due date, but during the grace period, the promissory note stated that late fees would not be charged. Supervision identified charging late fees during the grace period as unfair and deceptive under the Dodd-Frank Act.

  • Failing to provide accurate tax information: CFPB examiners found cases where student loan servicers failed to provide consumers with information essential for deducting student loan interest payments on their tax filings. The servicers impeded borrowers from accessing this information and misrepresented information on the consumers’ online account statements. This practice may have caused some consumers to lose up to $2,500 in tax deductions. Examiners found this failure to provide accurate information to be unfair and deceptive under the Dodd-Frank Act.

  • Misleading consumers about bankruptcy protections: CFPB examiners found that some servicers told consumers student loans are not dischargeable in bankruptcy. While student loans are more difficult to discharge in bankruptcy than most other types of loan, it is possible if the borrower affirmatively asserts and proves “undue hardship” in a court. Servicer communications with borrowers asserted or implied that student loans were never dischargeable. Examiners identified communications of this nature as deceptive under the Dodd-Frank Act.

  • Making illegal debt collection calls to consumers, at inconvenient times: Examiners found that one or more student loan servicers routinely made debt collection calls to delinquent borrowers early in the morning or late at night. For example, examiners identified more than 5,000 calls made at inconvenient times during a 45-day period, which included 48 calls made to one consumer. Supervision found these phone calls to be unfair under the Dodd-Frank Act.

Mortgage Servicing

In the wake of the financial crisis, mortgage servicing problems have plagued borrowers and caused many to lose their homes to illegal foreclosures. In January 2014, new CFPB mortgage servicing rules took effect to protect homeowners from servicing surprises and runarounds. The new rules implemented strong protections for struggling borrowers. The CFPB has also issued two supervisory bulletins warning mortgage servicers about servicing transfer violations. While supervising for compliance with federal law, Bureau examiners found that some servicers:

  • Failed to oversee service providers: Institutions contract with service providers for a number of reasons. They may use service providers to develop and market additional products or services or to provide expertise. The Bureau’s servicing rules specifically require servicers to have policies and procedures to oversee servicer providers. When institutions do not oversee their activities, service providers that are unfamiliar with consumer financial protection laws can harm consumers.

  • Unfairly delayed permanent loan modifications: Before finalizing a permanent loan modification, a servicer may first require a borrower to complete a trial modification. Once the borrower has successfully completed the trial modification, the servicer should then covert it into a permanent loan modification. Where there were delays in this conversion, examiners found that consumers were harmed because they did not promptly receive the benefits of the terms of the permanent modification.

  • Deceived consumers about status of permanent loan modifications: Examiners found that one or more servicers sent certain borrowers permanent modification agreements, which they signed and returned. The servicers, however, did not execute them. Instead, after a significant period of time, the servicers sent borrowers updated agreements with materially different terms. These misrepresentations about the available terms affected the borrowers’ payments, whether they would accept the modification, and how they could budget based on their expected payment.

Examiners also found problems in other markets. Some consumer reporting agencies had weak systems in place to track and resolve consumer complaints. At least one debt collector was imposing illegal fees on consumers and threatening consumers with litigation it did not intend to pursue. The CFPB expects all entities under its supervision to respond to customer complaints and identify major issues and trends that may pose broader risks to their customers.

Today’s report aims to share information that all industry participants can use to ensure their operations remain in compliance with federal consumer financial law. In all cases where CFPB examiners find problems, they alert the company to their concerns and outline necessary remedial measures. When appropriate, the CFPB opens investigations for potential enforcement actions.

Today’s edition Supervisory Highlights is available at: https://files.consumerfinance.gov/f/201410_cfpb_supervisory-highlights_fall-2014.pdf

The CFPB estimates that there is $1.2 trillion in outstanding student loan debt, with more than 7 million Americans in default. Student loan borrowers who are struggling with student debt can use the CFPB’s Repay Student Debt tool to navigate their options. Earlier this month, the CFPB also published a sample letter for private student loan borrowers to seek an affordable payment plan.

Official news published at https://www.consumerfinance.gov/about-us/newsroom/cfpb-supervision-report-highlights-risky-practices-in-student-loan-servicing/

Images courtesy of PixaBay

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RedeemTV Announces New Documentary: ‘The Shroud Face to Face’
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RedeemTV ? Streaming Goodness

Vision Video’s streaming platform RedeemTV is set to unveil the highly anticipated documentary The Shroud Face to Face on March 28, 2024.

The Shroud Face to Face, produced by The Nexus Institute and The Shroud LLC, is a captivating documentary that unravels the enigma of the Shroud of Turin. With cutting-edge technology and expert insights, the film provides a face-to-face encounter with this iconic relic, inviting audiences to delve into its history, authenticity, and the profound questions it raises.

This visually stunning film, based on the book The Shroud Face to Face by acclaimed author and filmmaker Robert Orlando, offers an immersive exploration of the centuries-old mystery surrounding the Shroud of Turin and has been endorsed with high praise.

"This is a compelling and convincing account of the single most fascinating relic in the Christian world. This is for anyone seeking to understand the significance and history of the Shroud of Turin.” — Bishop Robert Barron, founder of Word on Fire

'The Shroud Face to Face'

Watch Trailer: https://watch.redeemtv.com/trailer/the-shroud-trailer

RedeemTV is a FREE, donor-supported, Christian streaming platform with over 250,000 subscribers. Streaming more than 5,000 videos, it provides family-friendly content while continuing to spread the message of Jesus.

Vision Video is a leading DVD and film distributor, committed to bringing impactful and compelling stories to audiences worldwide. With a focus on cinematic excellence, Vision Video partners with filmmakers to showcase thought-provoking narratives that inspire and captivate.

The Nexus Media focuses on TV, motion pictures, books, and screenplays, along with award- winning documentaries and shorts. Our team has years of experience in media storytelling and developing well-crafted engaging content. We invite you to view some of our past projects, The Divine Plan and Silence Patton, and participate in our new initiatives.

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484-750-2485


Original Source: RedeemTV Announces New Documentary: 'The Shroud Face to Face'

Scholars of Mandeville Grand Opening to Feature New Orleans Saints Superstar Cam Jordan

Scholars is celebrating the Grand Opening of its second tutoring location in the Greater New Orleans area Thursday, March 28th. This Thursday's event features NFL superstar Defensive End Cam Jordan of the New Orleans Saints. Cam, the Saints all-time sack leader and 8x pro-bowler, will be available to meet and inspire the students and families of the Mandeville community.

Scholars of Mandeville Grand Opening to Feature New Orleans Saints Superstar Cam Jordan
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Scholars is an award-winning franchise tutoring system, providing broad academic support to students K-12 in all subjects.

This Thursday, March 28th, Scholars will celebrate the grand opening of its new location in Mandeville, Louisiana. The event begins at 11:30 a.m. and will take place at 1901 U.S. Hwy 190, STE 27, Mandeville, La.

Scholars is proud to be cutting the ribbon of its second location in New Orleans. This week’s event will also feature some NFL star power as Cam Jordan of the New Orleans Saints will be making an appearance. Renowned throughout the NFL for his ferocious and creative pass-rushing, Cam, the Saints all-time sack leader and 8x pro-bowler, is both a student of the game of football and a big believer in the importance of education off the field. Cam will meet and inspire the students and families of the community alongside Scholars CEO Matt Baxter and other special guests. 

The event is free to attend and will feature giveaways, food from local vendors, face painting, pictures, games, and other surprises.

Scholars of Mandeville owner Ryan Fitzsimmons is excited to give back to his community and to provide students in the area with world-class tutoring. “I’m always willing and able to help kids,” Fitzsimmons said. “I’m a huge believer in Scholars because I’ve seen it work. It’s really amazing and I’m excited to be a part of it.” 

Scholars' first Louisiana location was opened in 2021 by another NFL star, 5x Pro Bowl Offensive Tackle Terron Armstead. Scholars of New Orleans has brought the joy of success in school to hundreds of students over the past three years and provides the template which Ryan Fitzsimmons seeks to follow.

Scholars, which is celebrating its 25th anniversary in 2024, has over 80 locations across North America. It uses its world-class curriculum and programming coupled with qualified, caring teachers to provide exceptional tutoring services for students of all ages. It has won the Canadian Franchise Association’s Franchisees’ Choice Award for nine consecutive years, while also boasting the Franchisee of the Year Award in 2023. The first location in the United States was opened in Brookhaven, Georgia, by Baltimore Ravens great Jamal Lewis, and the company also includes local New Orleans legend & former Saints superstar Mark Ingram. 

Scholars Education                                                         

400 Applewood Cres, Suite 100

Toronto ON, L4K 0C3

1-866-777-2131

info@scholarscanada.com

Contact Information:
Peter Dyakowski
Scholars Education
peter@scholarsed.com
1-888-901-7323
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Original Source: Scholars of Mandeville Grand Opening to Feature New Orleans Saints Superstar Cam Jordan
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