Remarks by Director Kraninger During Consumer Data Industry Association Webinar

June 19, 2020 / Source: CFPB

Remarks by Director Kraninger During Consumer Data Industry Association Webinar

JUN 19, 2020

As prepared for delivery

Good afternoon. Thank you, Francis, for the introduction. I appreciate the opportunity to be with you today and I look forward to the day when we all will be able to meet safely in-person once again. For now, I am grateful that technology has given us a forum to connect.

Today I’d like to give you a high-level snapshot of what we are hearing directly from consumers through our consumer complaint process, and how we are helping consumers during this time and ensuring they have information on their rights, protections, and options. And, finally, I want to focus on the CARES Act and credit reporting, as well as the recent guidance from the Bureau on this topic.

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First, let’s talk about what we are hearing from consumers.

Consumer complaints have always provided the Bureau with valuable insights into the challenges consumers are experiencing with financial products and services. And we have used those insights to inform all of the Bureau’s work, including supervisory and enforcement activity. The Bureau also shares consumer complaint information with federal and state agencies to ensure that the Bureau and other regulators have useful information to support consumers.

During this public health emergency, the Bureau has continued to handle consumers’ complaints about financial products and services. In April and May, the Bureau received approximately 42,400 and 44,100 complaints, respectively—the highest monthly complaint volumes in the Bureau’s history. In April and May complaints mentioning COVID-19 related terms amounted to a total of approximately 7,200 complaints.

Among complaints that mention coronavirus terms, complaints about mortgages, credit cards, and credit or consumer reporting top the list at 19 percent, 18 percent and 18 percent of complaints, respectively. Among mortgage complaints that mention coronavirus keywords, 55 percent of consumers identified struggling to pay the mortgage as the issue. For credit card complaints, 23 percent of consumers identified a problem with purchase shown or statement as the issue.

For credit or consumer reporting complaints, 55 percent of consumers identified a problem with incorrect information on their report as the issue.

To help the Bureau monitor challenges consumers are experiencing in the marketplace, the Bureau has built tools to identify and analyze coronavirus-related complaints. These tools have helped us understand what consumers are experiencing in the marketplace. And as the pandemic evolves, they help us see what is shifting in terms of products and issues.

The Bureau works hard to identify these issues and get consumers answers.

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One of their biggest concerns right now is being able to pay the mortgage. As you are aware, the CARES Act provided important relief to struggling homeowners to receive assistance on their federally-backed mortgages. Borrowers experiencing financial hardship during the COVID-19 emergency are entitled to receive forbearance, and can request up to 180-days forbearance and if they still need assistance, they may request another 180 days. Additionally, if consumers do not have a federally-backed mortgage, many loan servicers offer forbearance or deferment options for non-government backed or private loans. And as I’ll discuss more in a moment, servicers and others who furnish must make sure that they do so in compliance with the FCRA, as amended by the CARES Act.

The CARES Act also provided a moratorium on evictions for consumers who are renting from owners who have a federally backed mortgage, or if they live in federally subsidized housing or get a federally subsidized grant or voucher.

There are a lot of options available to both homeowners and tenants during this time. The most important thing is to ensure that they have access to clear and accurate information about their options so they can make the best-informed decision for their situation.

HUD, FHFA, and the VA partnered with us to develop a new joint website with a wide range of housing information—a one stop shop for consumers. We are launched a campaign to ensure that we reach as many people as we can about this new website, but I urge you to help us in spreading the word to consumers. You can find the website at cfpb.gov/housing.

I do want to stress that we are telling struggling borrowers to reach out to their servicers to see what options are available to them. Under CFPB regulations, servicers are required to have policies and procedures in place to ensure the disclosure of the availability of CARES Act mortgage forbearance to consumers. If a consumer has an issue with their servicer, we encourage them to submit a complaint to us if the consumer can’t first resolve the matter with the servicer.

Our mortgage work has been front and center during this emergency. The Bureau has worked to help consumers continue to access mortgage credit from lenders and to work with their servicers to address problems with paying on their mortgages. Our efforts have included making sure that those who furnish information about mortgages to consumer reporting agencies do so in compliance with the FCRA, as amended by the CARES Act.

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The last issue I want to discuss is how the Bureau is working to ensure that furnishers and consumer reporting agencies are complying with the provisions of the CARES Act and the Fair Credit Reporting Act.

Congress and financial regulators have taken steps to ensure that consumers can receive the assistance that they need from their financial services providers. Payment accommodations, whether in the form of forbearance or payment reductions, are aimed at helping consumers weather this storm.

The information from consumer reports is used to make many kinds of important decisions. These decisions include whether we will be able to borrow money and how much we will pay in interest to finance a home, a car, or a higher education. Consumer reporting information is also commonly used for other purposes too, beyond credit, such as to determine if consumers can rent housing or obtain insurance and, if so, at what price. In short, consumer reporting can and does have a profound influence on our lives and whether we are able to take advantage of opportunities that determine our futures and help enable us to achieve our personal goals.

For this reason, the Bureau has dedicated significant resources toward enforcing the Fair Credit Reporting Act and other statues through robust supervisory and enforcement actions at both consumer reporting agencies and furnishers—work that continues as we evaluate specific risks to consumers as a result of the COVID-19 pandemic. The Bureau has focused on credit reporting accuracy and dispute handling—both obligations of CRAs and furnishers. At the very largest CRAs, we maintain an ongoing presence by a dedicated team of examiners. Our supervisory oversight has achieved significant improvements to CRAs’ compliance management systems and addressed law violations.

After the crisis hit, we issued a policy statement outlining the responsibilities of consumer reporting agencies and the companies that furnish data to consumer reporting agencies during the COVID-19 pandemic. We did this to help provide clarity after the CARES Act amended the Fair Credit Reporting Act, but also to provide temporary and targeted flexibility should a company experience staffing shortages as a result of the pandemic.

The guidance the Bureau issued instructed furnishers to comply with the CARES Act; they should report consumers as current on their loans if they have received any relief as a result of the pandemic and they were current prior to the offer of relief. We also encouraged lenders to continue voluntarily providing payment relief to consumers and reporting these obligations as current when they furnish to consumer reporting agencies. The continuity and accuracy of payment information produces substantial benefits for consumers, the credit system, and the economy.

Our guidance also provides temporary and targeted flexibility in the event CRAs or the furnisher experiences staffing challenges as a result of the pandemic in investigating consumer disputes. Let me make clear that all CRAs and furnishers remain responsible for conducting reasonable investigations of consumer disputes in a timely fashion. The policy statement makes clear that the Bureau expects CRAs and furnishers to make good faith efforts to investigate disputes as quickly as possible. The Bureau has jurisdiction over the hundreds of CRAs in operation, which include smaller and specialty CRAs, and numerous furnishers. The Bureau understands that the pandemic has created unique challenges for many CRAs and furnishers. For this reason, the Bureau believes it is appropriate to evaluate individually the efforts and circumstances of each CRA or furnisher in determining if it made good faith efforts to investigate as quickly as possible.

The Bureau continues to see the challenges the pandemic poses for the consumer reporting industry. We are committed to working with industry to respond quickly and ably to those challenges. The Bureau yesterday released Frequently Asked Questions addressing further consumer reporting issues which have arisen in the wake of the CARES Act and the pandemic. For example, the FAQs address how furnishers should report a consumer’s account status after the end of a payment accommodation they made to a consumer. The FAQs also clarify that a furnisher reporting that a consumer is affected by a natural or declared disaster is not a substitute for complying with the CARES Act credit reporting requirements. We hope that this and other guidance will assistance furnishers and others in the credit reporting system in complying with the law, thereby providing consumers with the benefits Congress intended.

We know that consumers are facing great challenges during this time. At the Bureau, we want to eliminate unnecessary worries for them. Consumers expect that their credit report should reflect accurate information of their financial history, and when it does not, the Bureau is ready to help them resolve those issues.

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Let me close by saying that we will continue to monitor the evolving landscape across all the markets we regulate, and we intend to continue to issue additional guidance to facilitate the ongoing productive and collaborative relationship between companies and their customers during this time, including the credit reporting industry.

Before taking questions, I want to thank you for taking the time to have this discussion today. We are committed to protecting consumers during this challenging time.

Thank you and I look forward to your questions.

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations, by making rules more effective, by consistently enforcing federal consumer financial law, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

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