On April 26th, the Consumer Financial Protection Bureau (CFPB) issued their Spring 2022 Supervisory Highlights. As predicted last month, on top of their observations list were Auto Servicing and Wrongful Repossessions.
Read the CFPB Spring 2022 Supervisory Highlights Here!
While the findings of their exams conducted between July 2021 through December 2021 cover a plethora of topics from credit reporting to credit card account management, debt collection, deposits, mortgage origination, prepaid accounts and student loan servicing, just below their introductions they have provided a glimpse of an area that all examined lenders should expect to an area of special focus.
2.1 Auto Servicing
The Bureau continues to examine auto loan servicing activities, primarily to assess whether entities have engaged in any unfair, deceptive, or abusive acts or practices (UDAAPs) prohibited by the Consumer Financial Protection Act of 2010 (CFPA).
2.1.1 Wrongful Repossessions
Examiners have continued to identify wrongful repossessions at auto servicers. Recent examinations found that servicers engaged in unfair acts or practices when they repossessed vehicles after consumers took action that should have prevented the repossession. This caused substantial injury by depriving borrowers of the use of their vehicles, and many consumers also experienced consequences such as missed work, expenses for alternative transportation, repossession-related fees, detrimental credit reporting, and vehicle damage during the repossession process. Such injury was not reasonably avoidable because consumers had taken action they believed would halt repossession and there was no additional action the consumer could take to prevent the repossession. Finally, the injury was not outweighed by countervailing benefits to the consumer or to competition. In response to these findings, servicers are enhancing their procedures, including enhancing timely communications with repossession agents, and remediating consumers.
None of this should be a surprise. Back in 2017, the CFPB published their September 12th by the Consumer Financial Protection Bureau (CFPB), titled the “Supervisory Highlights, Issue 16, Summer 2017”, the CFPB released their findings from examinations of “servicers” overseeing repossession agents and how repossessions are conducted. Through that work, they identified unfair practices relating to repossessions that had been causing wrongful repossessions of borrowers who had already brought their accounts to current statues.
At that time, the main culprit they were after was lenders/forwarders not closing repossession assignments in a timely enough manner to stop the recovery.
Unfortunately, many lenders and forwarding companies seem to have let their processes slip a little since the pandemic shutdowns and old problems are resurfacing.
Top of CFPB’s 2022 Supervisory Highlights; Auto Servicing and Wrongful Repossessions – CFPB – Consumer Financial Protection Bureau
Facebook Comments