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CFPB-SLSA Servicer Workgroup

CFPB-SLSA Servicer Workgroup. EFC/NCHER Legal Meeting New York City August 5, 2013. Background. CFPB agenda is very consumer complaint driven When borrowers don’t understand a process, it can lead to an inquiry or a complaint

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CFPB-SLSA Servicer Workgroup

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  1. CFPB-SLSAServicer Workgroup EFC/NCHER Legal Meeting New York City August 5, 2013

  2. Background • CFPB agenda is very consumer complaint driven • When borrowers don’t understand a process, it can lead to an inquiry or a complaint • The CFPB approach with these meetings has been that “where there is smoke, there may be fire….” but willing to admit that “the smoke may in fact be fog” • Certain preconceptions coming into these meetings • Tendency to think in terms of mortgage practices • Consumer bias • Servicers’ opportunity to explain and set the record straight • Best practices discussion

  3. Process • 10 servicers in workgroup • Mix of large and medium-sized • Bank and non-bank • For profit and not-for-profit • Private loans and FFELP loans • Weekly internal group calls to discuss servicing practices and specific questions raised by the CFPB • Issue papers looking at existing statutory and regulatory requirements, and comparable mortgage requirements • Surveys

  4. Process • 3-4 face-to-face ½ day meetings with the CFPB • Personnel from several offices • Office of Installment and Liquidity Lending Markets (Research, Markets and Regulations Division) • Office of Students • Office of Servicemember Affairs • Office of Consumer Response • Unlike supervision so far, no one from Enforcement!  • Use of PowerPoint overviews on each topic • All information marked “Business Information” • Follow-up questions

  5. Limitations on Discussion • Use of surveys helped in avoiding specific servicers having to talk about how they do something • “All” of the servicers in the group vs. “the majority” or “most” of the servicers in the group • FSA aware of the workgroup and instructed servicers not to discuss their role as DL servicers and contractors to ED

  6. Issues • Payment Posting • Online delays • Obstacles for posting as of receipt date • Prepayment • Due date advance and principal reduction • Standardization of servicemember information • Identifying and servicing servicemember borrowers • Servicemembers Civil Relief Act (SCRA) • Other benefits • Intergovernmental

  7. Issues • ACH – Account transfers • Technology issues • Legal transfer of the authorization authority  • Repayment Options for FFELP and Private Loans • Disclosure of options  • Servicing transfers and notification process • Intercompany technology issues • Borrower communication issues • Timing issues • Misdirected payment issues • RESPA model

  8. Outcome • We hope that the CFPB has gained valuable insights into the hows and whys of certain servicing practices • This new knowledge should inform their supervision of student loan servicers and help reduce issues in their supervision activities • Improved consumer education efforts

  9. Questions? • Winkie Crigler Executive Director, SLSA 202-955-6055 wpcrigler@slsa.net

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