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Federal Register / Vol. 86, No. 128 / Thursday, July 8, 2021 / Notices
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following a consumer complaint, one servicer failed to reverse the consequences of these unwanted automatic forbearances.
Second, at one servicer, enrollment in the automatic forbearance resulted in unenrollment of borrowers in the autodebit program completely. In other words, auto-debit did not resume when these forbearances ended following cancelation of the forbearance or the regular termination of the forbearance period. This resulted in consumers becoming past due on the loan when they believed that their payments had been automatically debited.
Consumers could not reasonably avoid the injury from either practice because the natural disaster forbearance was placed on their accounts automatically. Even where consumers recognized the forbearance was placed and contacted their servicer to opt-out, the servicers failed to fully reverse the consequences of the action. For consumers who explicitly do not want a natural disaster forbearance, the injuries were not outweighed by countervailing benefits to consumers or competition. The servicers have ceased automatically enrolling consumers in natural disaster forbearances.
2.10.6 Inaccurate Monthly Payment Amounts After Servicing Transfer Examiners found that servicers engaged in an unfair act or practice by failing to waive or refund overcharges they assessed after loan transfers. In previous editions of Supervisory Highlights, the Bureau has discussed other findings related to inaccurately billed amounts after loan transfers.
More specifically, consumers had enrolled in Income-Based Repayment IBR plans that lowered their student loan payment to a percentage of their discretionary income. When the loans were transferred to new servicers, they did not honor the terms of the IBR plan and sent consumers periodic statements listing inaccurate payment amounts, and in some instances, initiated automatic electronic debits in the incorrect amount. The servicers notified consumers of the error but did not refund or offer to refund any overpayments.
The conduct caused or was likely to cause substantial injury to consumers because the servicers required payments in excess of the amount required under the terms of the consumers IBR plans.
Consumers could not reasonably avoid the injury because they relied on the servicers calculations and representations in the periodic statements. Further, the servicers did not provide refunds to consumers if
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they requested refunds of the overpayments. The injury from this activity is not outweighed by the countervailing benefits to consumers or competition. For example, the benefits to consumers or competition from avoiding the cost of better monitoring of servicing transfers between entities would not outweigh the substantial injury to consumers. In response to the examination findings, these servicers added additional controls to their loan onboarding process.
2.10.7 Failure To Honor Payment Allocation Instructions Most servicers handle multiple student loans for one borrower in combined student loan accounts.
Servicers bill borrowers for the sum of the minimum monthly payments for each loan.
Examiners found that servicers engaged in an unfair practice by failing to follow borrowers explicit standing instructions regarding payment allocation.105
Examiners found that certain accounts contained at least one incorrectly applied payment. The failure to follow payment instructions resulted in borrowers paying more over the life of their loans or experiencing lost or delayed borrower benefits, such as cosigner release. Consumers were unable to reasonably avoid the injury because they relied on the servicers representation that they would allocate payments in accordance with the instructions provided. Finally, the injury from these errors is not outweighed by the countervailing benefits to consumers or competition. In response to these findings, services implemented new training and additional monitoring of payment allocation instructions.
3. Supervisory Program Developments 3.1.1 CFPB and NCUA Enter Into a MOU
The CFPB and the National Credit Union Administration NCUA
announced a Memorandum of Understanding MOU agreement to improve coordination between the agencies related to the consumer protection supervision of credit unions with over $10 billion in assets.106
The MOU better facilitates coordinated examinations to reduce redundancy and unnecessary overlap.
105 The Bureau has previously discussed payment allocation practices in Supervisory Highlights, Issue 9, Fall 2015 and Issue 10, Winter 2016.
106 The MOU is available at: https
files.consumerfinance.gov/f/documents/cfpb_ncuamemorandum-of-understanding_2021-01.pdf.

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CFPB and NCUA will also share information on training activities and content. Finally, the MOU will permit both agencies to share information related to supervisory activities and potential enforcement actions.
3.1.2 CFPB Issues Final Rule on the Role of Supervisory Guidance On January 19, 2021, the CFPB issued a final rule regarding the Bureaus use of supervisory guidance for its supervised institutions.107 The rule codifies the statement, with amendments, that the Bureau and other Federal financial regulatory agencies issued in September 2018, which clarified the differences between regulations and supervisory guidance.
The final rule states that unlike a law or regulation, supervisory guidance does not have the force and effect of law and the Bureau does not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.
The Bureau collaborated closely with other Federal financial regulatory agencies in this rulemaking, including by issuing a joint proposal for public comment.
3.1.3

CFPB Issues Interpretive Rule
On March 9, 2021, the Bureau issued an interpretive rule clarifying that the prohibition against sex discrimination under ECOA and Regulation B includes sexual orientation discrimination and gender identity discrimination.108 This prohibition also covers discrimination based on actual or perceived nonconformity with traditional sexor gender-based stereotypes, and discrimination based on an applicants social or other associations.
3.1.4 CFPB Rescinds Its Statement of Policy on Abusive Acts or Practices On March 11, 2021, the Bureau announced that it has rescinded its January 24, 2020 policy statement, Statement of Policy Regarding Prohibition on Abusive Acts or Practices. 109
107 The final rule is available at: https
files.consumerfinance.gov/f/documents/cfpb_roleof-supervisory-guidance_final-rule_2021-01.pdf.
108 The interpretive rule is available at: https
files.consumerfinance.gov/f/documents/cfpb_ecoainterpretive-rule_2021-03.pdf.
109 The Rescission of the Policy Statement is available at: https files.consumerfinance.gov/f/
documents/cfpb_abusiveness-policy-statementconsolidated_2021-03.pdf.

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