Email this page Print-Friendly PDF
Print this page
Consumer Financial Services Alert
CFPB and State Regulators Take Enforcement Action for Alleged UDAAP Violations

The CFPB announced an enforcement action against a nonbank mortgage lender and its mortgage servicer alleging the companies engaged in unfair, deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act. According to the complaint, the companies failed to timely and accurately apply payments made by borrowers, charged unauthorized fees for default-related services, imposed force-placed insurance when the companies knew or should have known that borrowers had adequate coverage, misrepresented to borrowers that loss mitigation programs would delay or halt foreclosure proceedings, engaged in robo-signing, and provided false information to consumers about the status of the loss mitigation review while referring loans to foreclosure, among other allegations.

The terms of the proposed order require the mortgage lender and its servicer to (1) establish a compliance committee and submit a compliance plan addressing dealer compensation policies, notices to dealers explaining ECOA and the bank’s expectations for dealers, among other things, (2) pay a civil money penalty of $18,000,000 to the CFPB and DOJ, (3) refund $125,000,000 to affected consumers, (4) provide $2 billion for principal reduction to consumers facing foreclosure, and (5) submit to compliance monitoring and reporting.

© 2016 Goodwin Procter LLP. All rights reserved. This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP, Goodwin Procter (UK) LLP or their attorneys. Prior results do not guarantee similar outcome.

Goodwin Procter LLP is a limited liability partnership which operates in the United States and has a principal law office located at 53 State Street, Boston, MA 02109. Goodwin Procter (UK) LLP is a separate limited liability partnership registered in England and Wales with registered number OC362294. Its registered office is at Tower 42, 25 Old Broad Street, London EC2N 1HQ. A list of the names of the members of Goodwin Procter (UK) LLP is available for inspection at the registered office. Goodwin Procter (UK) LLP is authorized and regulated by the Solicitors Regulation Authority.