On October 13, the Consumer Financial Protection Bureau (the "CFPB" or the "Agency") released the first edition of its Supervision and Examination Manual (the "Manual"). The Manual consists of three parts. Part I describes the Agency's compliance supervision and examination process; Part II outlines the Agency's examination procedures, including both general instructions and procedures for determining compliance with specific regulations; and Part III provides templates for reporting risk assessments, examination results, and supervision plans.
The Manual incorporates both the examination procedures and the ratings system developed by the Federal Financial Institutions Examination Council (the "FFIEC") for those laws recently transferred to the purview of the CFPB by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including the Truth in Lending Act (the "TILA"), the Real Estate Settlement Procedures Act (the "RESPA"), and the Fair Credit Reporting Act (the "FCRA").
The Manual also includes a new set of examination procedures for entities that conduct mortgage servicing activities. The CFPB regulators plans to employ these newly developed mortgage servicing examination procedures, immediately, in connection with its ongoing investigations into the servicing practices of large banks, thrifts and credit unions (i.e., institutions with over $10 billion in assets) and their affiliates. The CFPB has indicated that its first round of servicing examinations will focus principally on issues related to the servicing of non-performing loans, concentrating on certain key areas of interest to the Agency such as (i) fees charged by servicers to borrowers in default, (ii) servicers' foreclosure referral processes, and (iii) servicers' loan modification processes.
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