TROY, Mich.—Flagstar Bank here has agreed to pay $27.5 million to victims and a $10-million fine for violating the Consumer Financial Protection Bureau’s new mortgage servicing rules.
The CFPB said the bank illegally blocked borrowers’ attempts to save their homes, saying in a statement, “at every step in the foreclosure relief process, Flagstar failed borrowers. The bank took excessive time to process borrowers’ applications for foreclosure relief, failed to tell borrowers when their applications were incomplete, denied loan modifications to qualified borrowers, and illegally delayed finalizing permanent loan modifications.” Among other things, the bank has been ordered to help affected borrowers to preserve their homes.