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Federal Register / Vol. 86, No. 16 / Wednesday, January 27, 2021 / Notices
1. Introduction The Bureau is publishing this Special Edition of Supervisory Highlights to inform the public of observations in its prioritized assessment PA supervisory work conducted last year after the sudden onset of the COVID19
pandemic. PAs focused on assessing risks to consumers resulting from the pandemic.

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1.1

Background
The COVID19 pandemic had immediate and broad implications for Bureau-supervised entities. In a very short period of time, entities needed to adapt to a number of operational challenges, which included State stayat-home orders, staffing shortages, transition to partial or total remote work, and business closures.
COVID19 also deeply impacted consumers. Within three months of the pandemics start, the unemployment rate jumped to over 11 percent 1 and a significant number of consumers sought unemployment benefits. With large income losses, many households struggled to meet their credit obligations. In the early days of the pandemic, consumer requests for accommodations skyrocketed.
On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act the CARES
Act,2 which included a temporary small business lending program known as the Paycheck Protection Program PPP. It also amended certain provisions of the Fair Credit Reporting Act FCRA and established protections for consumers including homeowners and student loan borrowers. Institutions had to quickly implement the applicable CARES Act provisions.
The Bureau recognized the challenges posed by the pandemic and encouraged supervised entities to focus on assisting consumers. The Bureau issued a number of statements that provided entities with temporary regulatory relief. The Bureau also announced that, in certain instances, the Bureau would take a flexible supervisory and enforcement approach during the pandemic. For more information about these statements please visit the Bureaus website at https www.consumer finance.gov/compliance/supervisoryguidance/.
1 U.S. Department of Labor. July 17, 2020.
Economics News Release: Employment Situation Summary, available at: https www.bls.gov/
news.release/archives/laus_07172020.pdf.
2 Coronavirus Aid, Relief, and Economic Security Act, Public Law 116136, 134 stat. 281 March 27, 2020.

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1.2 Prioritized Assessments In May of 2020, the Bureau rescheduled about half of its planned examination work and instead conducted PAs in response to the pandemic. PAs were higher-level inquiries than traditional examinations.
They were designed to obtain real-time information from a broad group of supervised entities that operate in markets posing elevated risk of consumer harm due to pandemic-related issues.
The Bureau, through its supervision program, analyzed pandemic-related market developments to determine where issues were most likely to pose risk to consumers. The Bureau also prioritized markets where Congress provided special provisions in the CARES Act to help consumers.
The Bureau sent targeted information requests to a significant number of entities to obtain information necessary to assess risk of consumer harm and violation of Federal consumer financial law. Each targeted information request was specific to the product market, that markets attendant risks to consumers, and the institution. The targeted information requests focused on a short period of time, generally from early May 2020 through September 2020.
Typically, targeted information requests sought, as applicable:
Information on how the institution was assisting consumers;
challenges the institution was facing as a result of the COVID19
pandemic;
changes the institution made to its compliance management system CMS
in response to the pandemic;
information about the institutions relevant communications with consumers;
basic data regarding the institutions response to the COVID19
pandemic; and information about service providers.
PAs were not designed to identify violations of Federal consumer financial law, but rather to spot and assess risks and communicate these risks to supervised entities so that they could be addressed to prevent consumer harm.
The Bureau sent close-out letters to entities that detailed any observed risks and contained supervisory recommendations, if applicable. The Bureau will be following up on risks identified while conducting PAs in the normal course of the Bureaus supervisory work.
2. General Observations Many entities offered accommodations to consumers that
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experienced pandemic-related hardships. The CARES Act mandated forbearance options on federally backed mortgages and placed most student loans owned by the Department of Education into forbearance, and mandated zero interest accrual for all federally owned student loans. Even where not legally required, many entities also offered accommodations, including expanded payment assistance programs and fee waivers. For example, many auto servicers offered six-month payment deferrals to any consumer with a COVID19 hardship, and many credit card issuers also offered deferrals that ranged from one to six months.
Some Bureau-supervised entities struggled to adjust to the rapid changes brought on by the pandemic. Many institutions experienced increased call volumes from consumers requesting relief or disputing charges, with corresponding increases in hold times for many consumers. For some entities, the combination of rapid program implementation and operational challenges resulted in elevated risk of consumer harm. For example, several entities experienced a backlog of accommodation requests or provided inaccurate information to consumers about the accommodations they offered.
Other risks observed by Bureau examiners ranged from inaccurate credit reporting to failure to send out timely disclosures. In many cases, staffing shortages or inaccurate training materials led to these issues.
Many institutions created COVID19
response teams to identify and address consumer and industry challenges caused by the pandemic. Many entities engaged in robust monitoring of key processes, leading them to self-identify issues and implement corrective actions where needed. Other entities made changes in response to risks that Bureau examiners observed. Commonly seen changes made by institutions included:
Providing consumer remediation;
reversing fees;
updating scripts to provide accurate information to consumers;
transitioning from manual to automated processes;
correcting inaccurate credit reporting; and correcting account histories.
Some entities also increased staffing to clear backlogs and to address increased demand for accommodations.
3. Supervisory Observations Specific PA observations are described in this report in the areas of mortgage, auto and student loan servicing, credit card account management, consumer reporting-

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