WASHINGTON (Legal Newsline) — The Consumer Financial Protection Bureau (CFPB) announced April 26 that recent supervisory work revealed that some student loan and mortgage services have been violating the law in failing to provide struggling borrowers with legal protections.
“We found that some mortgage and student loan services are violating the law by failing to provide protections to borrowers,” said CFPB Director Richard Cordray. “Their slipshod practices are putting borrowers at risk of financial failure and we will hold them accountable."
The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the CFPB the power to supervise banks and credit unions with more than $10 billion in assets, as well as certain non-banks. These include mortgage companies, private student lenders, payday lenders and others defined as “larger participants.”
According to the CFPB, student loan services often routinely act on flawed information and fail to reverse charges that have been wrongly imposed on borrowers still in school. Mortgage services, the CFPB says, often fail to disclose foreclosure alternatives to consumers, prematurely launch foreclosure processes, mishandle escrow accounts and issue incomplete periodic statements.