CFPB Enters into $5.25 Million Consent Order with California Mortgage Servicer

On November 17, 2022, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order with a California-based mortgage servicer concerning its purported failure to provide certain borrowers forbearances and protections from credit reporting, as required under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  According to the CFPB, the servicer’s actions amounted to deceptive acts or practices in violation of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531 and 5536(a)(1)(B), and also violated various sections of the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681s-2(a)(1)(A), (a)(1)(F)(ii), and (a)(2), and Regulation V, 12 C.F.R. § 1022.42.

Specifically, the CFPB alleged that the servicer failed to implement CARES Act protections and agency guidelines regarding assistance available for borrowers with federally-backed mortgages through a number of misrepresentations to consumers. For example, the CFPB alleged that the company falsely represented that: borrowers were not eligible for forbearance at all, or that they could not have 180 days of forbearance upon request; consumers were required to make detailed attestations that exceeded details required by law; and that late fees would be charged when not permitted by law. Further, the CFPB alleged the servicer inaccurately reported the status of borrowers on forbearance to credit reporting agencies (CRAs), in violation of FCRA, and failed to maintain and update its written policies and procedures relating to furnishing forbearance information to CRAs.

Pursuant to the consent order​, the servicer agreed to pay $5.25 million in civil penalties​, and further agreed to conduct an audit to ensure return of improperly assessed late fees, improve staffing and training relating to CARES Act and agency guidelines, and establish internal policies and procedures to ensure similar​ issues do not recur again.