CFPB and Multistate Settlement with Large Mortgage Servicer – Appx. $90 Million
The Consumer Financial Protection Bureau entered a consent order against a national mortgage servicer, on December 7, 2020, alleging unlawful servicing practices. The servicer is the largest non-bank mortgage servicer in the United States. The Bureau alleged that the servicer engaged in unfair and deceptive practices prohibited by Dodd Frank, the Real Estate Settlement Procedures Act and the Homeowner’s Protection Act. The Bureau’s allegations included:
· Between January 2012 and January 1, 2016, in numerous instances the servicer failed to identify loans on its systems that had pending loss-mitigation applications or trial-modification plans, and as a result failed to honor borrowers’ loan modification agreements.
· The servicer foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending.
· The servicer improperly increased borrowers’ permanent, modified monthly loan payments, mispresented to borrowers when they would be eligible to have their private mortgage insurance premiums canceled, and failed to timely remove private mortgage insurance from borrowers’ accounts.
· The servicer allegedly failed to timely disburse borrowers’ tax payments from their escrow accounts and failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings.
The proposed judgment and order, if entered by the court, would require the servicer to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It would also require the servicer to pay a $1.5 million civil penalty to the Bureau. The servicer would also be required to, among other things, enhance policies and processes including those related to handling consumer complaints and disputes, conducting escrow analyses on borrowers’ accounts, transferring information during servicing transfers, offering loss mitigation, and terminating borrowers’ private mortgage insurance.
For more information, contact Troy Garris at 301-461-8952 or troy@garrishorn.com.
