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CFPB Semi-Annual Report: Trends Every Mortgage Lender Needs to Watch

December 14, 2024

The CFPB’s recently released Semi-Annual Report, covering October 1, 2023, through March 31, 2024, highlights important trends in consumer complaints and fair lending compliance. These insights reveal areas where lenders are performing well and where significant opportunities for improvement remain. With the regulatory landscape becoming increasingly complex, it is vital for mortgage professionals to take note of these findings and proactively address compliance risks.

1.Consumer Complaints: A Decline in Mortgage Concerns

One of the most encouraging takeaways from the report is the continued decline in mortgage-related consumer complaints. Of the 1.836 million complaints received by the CFPB between April 2023 and March 2024, only 1% were related to mortgages. By contrast, credit and consumer reporting accounted for a staggering 80% of all complaints, followed by debt collection at 7% and credit cards at 4%. This downward trend in mortgage complaints signals that lenders are making strides in addressing borrower concerns. However, staying ahead will require lenders to maintain strong customer service practices, clear disclosures, and efficient servicing processes.

2.Fair Lending Compliance: Key Areas for Improvement

Fair lending compliance, on the other hand, continues to pose challenges for the industry. During the first half of FY 2024, the CFPB conducted 10 supervisory reviews of financial institutions, uncovering frequent issues with regulatory compliance. Lenders were found to have issued incomplete Notices of Incompleteness (“NOIs“) and Adverse Action Notices (“AANs“), violating the Equal Credit Opportunity Act (“ECOA“) and Regulation B. Additionally, many institutions were cited for inaccuracies in their Home Mortgage Disclosure Act (“HMDA“) Loan Application Register (“LAR“) data, a breach of Regulation C. These findings highlight the need for lenders to pay closer attention to fair lending practices and data integrity.

3.Regulatory Recommendations: Enhancing Compliance Programs

To address these shortcomings, the CFPB has encouraged lenders to strengthen their oversight of redlining risks, improve their Compliance Management Systems (“CMS“) for HMDA reporting, and implement monitoring programs to identify and mitigate appraisal bias or discrimination. These steps are essential not only for meeting regulatory requirements but also for fostering greater equity in lending practices. The CFPB’s emphasis on fair lending is further underscored by its referral of four redlining cases to the Department of Justice, signaling heightened scrutiny and enforcement in this area.

4.What This Means

For mortgage lenders and brokers, the Semi-Annual Report serves as both a progress report and a roadmap. While the decline in mortgage complaints is a positive sign, lenders cannot afford to become complacent. Enhancing compliance programs, ensuring accurate reporting, and addressing fair lending risks should be top priorities. By taking these steps, lenders can mitigate regulatory risks and build stronger, more trusted relationships with their customers.