Some financial firms fail to provide borrowers with “clear and timely disclosures” during the real estate settlement process, examiners with the Consumer Financial Protection Bureau said in a compliance update.
The examiners released a report Wednesday, highlighting some of the issues they discovered during the CFPB’s first year of oversight.
Examiners discovered that some players in the mortgage space are not providing accurate disclosures on interest rates, payments and payment schedules to borrowers.
Potential compliance issues also surfaced when the CFPB evaluated good-faith estimates provided to consumers and HUD-1 disclosure forms, the bureau said.
The regulator also claims some credit bureaus, which can effect a borrower’s credit score, are at times failing to train employees on how to comply with fair credit reporting requirements. This practice has led to errors in credit reports, impacting a homeowner’s future borrowing capacity.
CFPB examiners released highlights of their findings, along with a supervision manual to give lenders and nonbank firms an idea of what issues examiners will be tackling in the marketplace.
The Dodd-Frank Act empowered the CFPB to oversee the activities of banks and nonbanks to ensure they comply with all federal consumer financial laws.
“Through our supervision process, we are bringing heightened oversight to the consumer financial markets,” said CFPB Director Richard Cordray. “This report underscores our work to address practices that are risky to consumers, as well as our continued commitment to making sure that institutions are following the law.”
Dodd-Frank gave the CFPB the authority to supervise both bank and nonbank financial institutions that impact consumers.
The latest examiner update highlights findings from probes that occurred from July 21, 2011, through Sept. 30, 2012.
The CFPB also is offering an appeals process that financial firms can use when they object to an examiner’s findings.
