CFPB Takes Action Against Mortgage Servicer for Unlawful Practices

On June 7, 2017, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order with a Chicago-based mortgage servicing company, settling allegations that it failed to provide borrowers with the foreclosure protections required by law.

According to the CFPB, the mortgage servicer violated federal consumer protection laws in its handling of foreclosure-prevention applications and its implementations of federally required foreclosure protections.  Specifically, the CFPB alleged that the servicer’s conduct was in violation of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seq., its implementing regulation, Regulation X, 21 C.F.R. part 1024, and the Consumer Financial Protection Act of 2010.  The consent order claims that the servicer violated federal law by, among other things, taking prohibited foreclosure actions against certain borrowers who had submitted timely foreclosure relief applications, failing to send timely or accurate notices acknowledging receipt of such applications or evaluating borrower applications for available relief options, and failing to provide borrowers with information concerning the necessary documentation to complete their applications.

As part of the consent order, the mortgage servicer is required to pay up to $1.15 million to affected consumers, solicit affected consumers to offer them foreclosure-avoidance opportunities, and cease its illegal servicing practices and comply with federal mortgage servicing regulations.