On January 23, the Consumer Financial Protection Bureau (CFPB) announced that it entered into a consent order with a mortgage servicer, resolving allegations that the servicer violated the Real Estate Settlement Procedures Act (RESPA) and the Consumer Financial Protection Act (CFPA).
The CFPB alleged that, during 2014, the servicer informed borrowers seeking loss mitigation options that they were required to submit a large number of documents to complete their application — many of which did not apply to certain borrowers or were not required. In some cases, the servicer requested documents that a borrower had already submitted in support of his or her application.
To resolve these allegations, the servicer agreed to change its loss mitigation application practices to comply with RESPA and its implementing regulations. The servicer agreed that it would not misrepresent to consumers the documents and information actually necessary to complete a loss mitigation application. And, for all affected consumers who did not receive a decision on their application, the servicer agreed to halt all foreclosure-related activity, contact the consumer, and evaluate any loss mitigation application submitted as a result of this outreach.
The servicer further agreed to provide consumers with $17 million in restitution, and pay a $3 million penalty to the CFPB.