CFPB’s recently released report of their supervisory action for the first 4 months of 2016 revealed that although most lenders are complying with mortgage-related laws, some are still having problems in some areas.
CFPB’s Director, Richard Cordray, stated, “The bureau’s supervisors continue to perform more and better oversight of these financial markets and their report give the industry an opportunity to reflect on their practices before consumers are made to suffer harm.”
You can view the CFPB’s report HERE.
Lenders are required to have a written Compliance Management System (CMS) which covers 4 main independent components:
- Board/Senior Management Oversight;
- A documented Compliance Plan;
- A documented process for Compliance Audits; and
- A process for providing adequate responses to consumer complaints.
When CFPB comes calling, they’ll check to make sure you have a written CMS and that all the related, required policies and procedures are in place to effectively manage compliance and protect consumers. If not, no matter how well you operate, you may be in serious trouble. Make sure your plan and related policies and procedures are in writing, and that all employees have easy access and are fully familiar.
In their recent report, they note such findings as:
- Incorrect calculation of finance charges
- Illegal referrals and related fees
- Improper notice of denials
- Weak oversight/auditing of automated systems
These findings again emphasize the need for lenders to have a timely and adequate pre and post-closing audit process. It’s not enough to program automated systems and write policy to comply; checks must be done to ensure things are being done right. Too much is at stake.
Are you prepared for a CFPB audit? Do you have a well-documented CMS? Are all employees operating in compliance with your plan? You had better make sure before it’s too late and you end up as a statistic in CFPB’s Supervisory Highlights.