|
 Financial institutions hire servicing companies to do jobs that
include collecting and processing loan payments, modifying loans,
answering customer questions, maintaining loan records and in some
cases helping struggling borrowers.
The CFPB found that some student loan servicers inflated minimum
payments due, made illegal debt collection calls or charged unlawful
late fees, even after borrowers had made payments during the grace
period. The report did not specify which companies were being
accused of breaking the rules.
Some servicers also misrepresented information on borrowers' online
statements or failed to provide accurate records for tax purposes,
causing some students to lose up to $2,500 in tax deductions, the
report said.
U.S. student loan debt exceeds $1.2 trillion according to CFPB
estimates, and servicers manage loans of more than 40 million
borrowers.
The agency previously said it had found troubling similarities in
problems faced by student loan borrowers dealing with servicers and
those faced by homeowners dealing with mortgage servicers.
The CFPB, which has sought to clean up the mortgage industry, also
found that some mortgage servicers unfairly delayed permanent loan
modifications, or misrepresented and confused borrowers about their
terms.
After consumers had turned in the signed permanent loan modification
agreements, the CFPB said, some servicers did not execute them, but
instead later sent customers updated agreements with different
terms.
"These misrepresentations about the available terms affected the
borrowers' payments, whether they would accept the modification, and
how they could budget based on their expected payment," the agency
said.
[to top of second column] |
The CFPB, created by the 2010 Dodd-Frank law, oversees banks and
credit unions assets exceeding $10 billion and non-bank financial
institutions of all sizes, including mortgage companies, loan
servicers, payday lenders and private student loan lenders.
The agency has brought cases against several companies, including GE
Capital Retail Bank, ACE Cash Express, U.S. Bank, Flagstar Bancorp,
and M&T Bank. The agency said its enforcement actions have so far
yielded about $308 million for more than 1.2 million consumers for
cases related to credit cards, payday loans, mortgage servicing and
checking accounts.
"All borrowers should be treated fairly by loan servicers, and
through our supervision program, we intend to hold them accountable
for how they treat borrowers," CFPB director Richard Cordray said in
a statement.
(Reporting by Elvina Nawaguna; Editing by David Gregorio)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
