CFPB-SLSA Servicer Workgroup EFC/NCHER Legal Meeting New York City August 5, 2013 Student Loan Servicing Alliance
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 Student Loan Servicing Alliance
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
Student Loan Servicing Alliance
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 Student Loan Servicing Alliance
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
Student Loan Servicing Alliance
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 Student Loan Servicing Alliance
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
Student Loan Servicing Alliance
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 Student Loan Servicing Alliance
Questions?
Winkie Crigler Executive Director, SLSA 202-955-6055
[email protected]
Student Loan Servicing Alliance
