without consideration of their ability to repay the debt over
the life of the modified loan. Apparently after one to two years,
the new monthly payments ballooned to a dollar amount that
was higher than the borrower had been paying when they
defaulted. The AG also accused the servicer of denying modification requests on the grounds the borrower had not supplied
the correct information, when in fact the forms had been completed but were lost by the servicer.
■ ■ ■ While the Federal Reserve (Fed) has not publicized many
UDAP consent orders, in February it took the unique step of
restricting one bank’s growth until it substantially improves its
consumer protection governance and controls. The regulator
cited the bank for its sales culture and lack of commensurate
risk management framework. Concurrently, the bank must
replace four members of its Board of Directors, three immediately and one by the end of the year.
We’ve all seen the ability to repay rules but should verify that
our default processes also take them into consideration. There
has also been a trend in the last year to insist that banks and other
mortgage servicers be clear with customers in the loss mitigation
realm. This includes only requesting documents that have not yet
been received and correctly logging information received.
So that’s what’s new with UDAAP: new (and very active)
enforcers. And what’s new with you? ■
ABOUT THE AUTHOR
■ ■ ■ In February, the Connecticut Department of Banking settled
with a large auto servicer, fining them $100,000 and requiring remediation of nearly $3 million. The state alleged that
the servicer had incorrectly calculated the deficiency balance
on repossessed vehicles and thus failed to provide an accurate
written statement itemizing the disposition of the proceeds.
Like we’ve seen with mortgage defaults, the states and banking regulators are very sensitive to being accurate with borrowers experiencing difficulty with their car loans. If your bank
offers auto loans, you will want to verify that all accounting
and paperwork are completed correctly.
MEG SCZYRBA, CRCM, has been involved in the
compliance industry for over 20 years and currently
chairs the ABA Compliance School Board and the ABA
Bank Compliance magazine Board. She has taught
UDAAP for the ABA Compliance Schools since its
inception in 2005, and she is also a frequent speaker at industry
compliance conferences and schools. Meg has published a number
of articles on topics ranging from Reg AA/UDAAP to Reg O and
authored the recurring Training Room column in ABA Bank
Compliance. Meg was honored as ABA’s 2011 Distinguished Service
Award recipient. Meg is a graduate of the University of Missouri–
Columbia, with a B.A. in in Psychology and a Juris Doctor. She can
be reached at email@example.com.
Any opinions expressed in this article are the author’s own and do not
reflect the view of her employer or the ABA.
ABA Compliance 2018_half page_FINAL.pdf 1 4/5/18 11:51 AM
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