The Consumer Financial Protection Bureau (CFPB) has released its latest supervision report highlighting a number of violations, including mortgage origination and fair lending violations.
The bureau did not comment by press time as to whether reverse mortgage lenders were involved in any of these cases.
In its report, released Wednesday, CFPB examiners uncover several issues relating to mortgage origination violations. For instance, in one or more cases, examiners found that some loan originators illegally received compensation based on the terms of the loan.
Additionally, they found that at some loan originators the amounts disclosed on the HUD-1 form improperly exceeded those disclosed on the Good Faith Estimate (GFE) — violating rules that require the loan originator to be bound to the settlement charges and terms listed on the GFE provided to the borrower.
Some loan originators also advertised the length of payment, amount of payments, numbers of payments, and finance charges without providing the required disclosures.
Finally, the CFPB found weaknesses in compliance management systems, which consequently allowed numerous violations to occur. In some instances, the institutions’ board members were not properly trained; in others, audits performed by third parties were too limited in scope.
In addition to mortgage origination violations, the CFPB report highlights fair lending violations, noting that one or more institutions rejected mortgage applications from consumers because they relied on public assistance income, such as Social Security or retirement benefits, in order to repay the loan.
In some cases, marketing materials even contained written statements prohibiting non-employment sources of income, and discouraged applicants who received public assistance from applying for credit — violating the Equal Credit Opportunity Act.
“The CFPB will continue to monitor both bank and nonbank markets to ensure deception is rooted out, deficiencies are corrected, remediation is given to consumers, and violations are stopped in their tracks,” said CFPB Director Richard Cordray, in a statement.
Written by Emily Study
