The Consumer Financial Protection Bureau's new leader is vowing to move quickly to penalize mortgage servicers, banks and other financial companies that have failed to provide relief to military veterans and others during the pandemic.
The bureau will expedite enforcement investigations tied to the Military Lending Act and Coronavirus Aid, Relief, and Economic Security Act to ensure that the industry “gets the message that violations of law during this time of need will not be tolerated,” acting Director Dave Uejio wrote in a blog post Thursday.
Helping consumers who are suffering financially from the coronavirus pandemic is one of the CFPB's top priorities, along with enforcement of fair lending laws and identifying unlawful conduct that disproportionately harms communities of color and other vulnerable populations, he said.
“The CFPB will take aggressive action to ensure that regulated companies follow the law and meet their obligations to assist consumers during the COVID-19 pandemic,” Uejio said. “In some cases, penalties may be necessary.”
Uejio reiterated that the CFPB, as part of its attention to matters of racial equity, will focus on banks that only took applications for the Paycheck Protection Program from preexisting customers; such decisions have had a "disproportionate negative impact" on minority-owned businesses, in the eyes of some critics.
“The country is in the middle of a long overdue conversation about race, and as we all know, practices and policies of the financial services industry have both caused and exacerbated racial inequality,” Uejio said.
The CFPB, under the new Biden administration, is breaking from recent policy tied to the Military Lending Act. Three years ago, the Trump administration refused to supervise banks and financial firms for compliance with the MLA, claiming that further legislation was necessary. The Department of Defense and roughly 30 military and veterans groups opposed the Republican position on the act, which imposes a 36% annual percentage interest rate cap for active-duty military members and their dependents.
“This is great news for our troops and their families," Sen. Jack Reed, D-R.I., said in a press release. "The Military Lending Act makes an enormous difference for active duty members of the military, and I am pleased the CFPB will fully uphold the law once more and use the tools at their disposal to shield our troops from abusive practices," said Reed, a member of the Banking Committee.
On COVID-19-related issues, Uejio cited six recent examples of violations of the CARES Act.
The bureau plans to investigate whether banks tapped consumers' stimulus and unemployment insurance benefits to cover bank fees and other debts.
A crackdown also is expected on mortgage servicers that gave consumers inaccurate information about forbearances, failed to process forbearance requests and assessed late fees on borrowers. Some servicers were found to have taken payments from borrowers who had received deferments of their mortgages, Uejio said.
Student loan servicers also are in the CFPB’s crosshairs. One student loan servicer denied thousands of forbearance extensions, Uejio said.
In addition, he said, companies across many markets have misreported borrowers to the credit bureaus in violation of the CARES Act and the Fair Credit Reporting Act.
More changes at the CFPB are on the way.
“Over the coming weeks, we will also be reversing policies of the last administration that weakened enforcement and supervision,” Uejio said. “And we are planning to rescind public statements conveying a relaxed approach to enforcement of the laws in our care.”