Quiero saber acerca de...

Federal Register / Vol. 86, No. 128 / Thursday, July 8, 2021 / Notices servicers know that the charges for PMI will not last a full twelve months and will terminate before the end of the escrow year. Because the servicers know the charges for PMI will terminate for certain mortgages, including PMI
charges after the termination date in the annual escrow analysis violates 12 CFR
1024.17c7. In response to these findings, the servicers began considering the PMI termination information in their systems while conducting the annual escrow analysis.
2.8 Payday Lending The Bureaus Supervision program covers entities that offer or provide payday loans. Examinations of these lenders identified deceptive acts or practices.

lotter on DSK11XQN23PROD with NOTICES1

2.8.1 Misrepresentations Regarding an Intent To Sue Examiners found that lenders engaged in deceptive acts or practices in violation of the CFPA when they sent delinquent borrowers collection letters stating an intent to sue if the consumer did not pay the loan.101
Examiners found the representations misled or were likely to mislead consumers, and that consumers interpretations were reasonable. A
reasonable borrower could understand the letters to mean that the lender had decided it would sue if a borrower did not make payments as required by the letter. In fact, the lenders had not decided prior to sending the letters that they would sue if borrowers did not pay, and in most cases did not sue borrowers who did not pay. The representations were material because they could induce delinquent borrowers to change their conduct regarding their loans. For example, consumers may have made payments they otherwise would not have, in order to avoid the possibility of suit. In response to examination findings, the entities ceased issuing letters stating an intent to sue where such a determination had not already been made, and enhanced collections communication-related policies and procedures, training, and monitoring.
2.8.2 Misrepresentations That No Credit Check Will Be Conducted Examiners observed that lenders engaged in a deceptive act or practice in violation of the CFPA when they falsely represented on storefronts and in photos on proprietary websites that they would not check a consumers credit history. In fact, the lenders used consumer reports from at least one consumer reporting 101 12

U.S.C. 5531, 5536a1B.

VerDate Sep<11>2014

16:47 Jul 07, 2021

Jkt 253001

agency in determining whether to extend credit. It was reasonable for a consumer to interpret the representations as meaning that the lenders would not check a consumers credit history when deciding whether to extend credit, and the representations were material because they were likely to affect consumers conduct with respect to applying for loans.
Prospective customers may have had concerns about their credit histories and ability to obtain credit, and consequently made a different choice.
Moreover, storefront advertising claims were express and presumed material. In response to these findings, the lenders ceased making misleading representations on signage at branch locations and websites, and implemented enhanced advertising oversight.
2.8.3 Deceptive Presentation of Repayment Options to Borrowers Contractually Eligible for No-Cost Repayment Plans When consumers indicated an inability to repay their payday loans, lenders engaged in a deceptive act or practice by presenting payment options to consumers in a manner that misled or was likely to mislead them. Examiners found that, as a result of the institutions process of presenting fee-based refinance options to struggling borrowers while withholding information about contractually available no-cost repayment plan options, many consumers entered into fee-based refinances despite being eligible for a no-cost repayment option.
The presentation of payment options misled, or was likely to mislead, consumers into believing that there was not a no-cost installment repayment option despite the loan agreements providing for one. Consumers may have also been misled into believing that a no-cost option was only available if the consumers first rejected or were found ineligible for other options, such as a fee-based refinance. A consumers misunderstanding of their repayment options would be reasonable in light of the fact that the consumers who elected these other options were not told about the no-cost repayment plan option by the institution at the time that the consumers expressed difficulty repaying their loans. The institutions misleading practice was material because it caused consumers to incur fees, such as for refinances, that could have been avoided had they been aware of their contractual right to a no-cost repayment option.

PO 00000

Frm 00045

Fmt 4703

Sfmt 4703

36119

2.9 Private Education Loan Origination The Bureau has supervisory authority over entities that offer or provide private education loans.102 The Bureau examines private education loan origination activities for compliance with applicable Federal consumer financial laws, including assessing whether entities have engaged in any unfair, deceptive, or abusive acts or practices prohibited by the CFPA.
Examinations of these entities identified at least one deceptive act or practice.
2.9.1 Deceptive Marketing Regarding Private Education Loan Rates Examiners found that entities engaged in a deceptive act or practice 103 by 1
advertising rates as low as X%, 2
disclosing certain conditions to obtain that rate e.g., the borrower must make automatic payments and the rate was available only for applications filed by a date certain, and 3 omitting that a borrowers rate would depend on their creditworthiness. Examiners determined that the net impression of the marketing materials misled or was likely to mislead consumers to believe the as low as rate was available regardless of creditworthiness. The consumers interpretation of such representations was reasonable under the circumstances and the entities misleading representations were material to consumers decisions to apply for a private education loan because it could impact the consumers decision to apply for or take the loan. As a result, the entities have removed the phrase as low as from its marketing materials and, rather, advertises the entire range of rates e.g., X.XX%YY.YY%. Also, each entity involved now discloses that the lowest rates are only available for the most creditworthy applicants, in addition to other disclosures.
2.10 Student Loan Servicing The Bureau continues to examine student loan servicing activities, primarily to assess whether entities have engaged in any unfair, deceptive or abusive acts or practices prohibited by the CFPA. Examiners identified three types of misrepresentations servicers made regarding consumer eligibility for the Public Service Loan Forgiveness PSLF program. Examiners also identified two unfair acts or practices related to failure to reverse negative consequences of automatic natural disaster forbearances and an unfair act or practice related to failing to honor consumer payment allocation 102 12
103 12

E:FRFM08JYN1.SGM

U.S.C. 5514a1D.
U.S.C. 5531 and 5536a1B.

08JYN1