WASHINGTON—The CFPB reported that it is taking action against Carrington Mortgage Services for “deceptive acts or practices” under the Consumer Financial Protection Act in connection with mortgage forbearances.
According to the CFPB, the agency found that Carrington failed to implement many protections, provided to borrowers with federally backed mortgage loans who were experiencing financial hardship, during the COVID-19 public health emergency.
“The CFPB found that Carrington misled certain homeowners who had sought a forbearance under the CARES Act into paying improper late fees, deceived consumers about forbearance and repayment options, and inaccurately reported the forbearance status of borrowers to the big three credit reporting companies: Equifax, Experian, and TransUnion,” The Bureau said.
$5 Million Fine
The CFPB has ordered Carrington to repay any late fees not already refunded, repair its faulty business practices, and pay a $5.25 million penalty that will be deposited into the CFPB’s victims relief fund.
Carrington Mortgage Services is a non-bank mortgage servicer headquartered in Anaheim, Calif. Carrington operates in all 50 states.
In announcing the penalty, the CFPB said, “In 2020, Congress passed the CARES Act, which provided mortgage protections to borrowers with federally backed mortgage loans who were experiencing financial hardship during the COVID-19 public health emergency. One key protection was that mortgage servicers were required to provide forbearances of up to 180 days upon request. Borrowers were also afforded certain credit reporting protections. Federal agencies and GSEs also issued their own guidelines to servicers about assistance for borrowers during the pandemic.”
The CFPB added that it investigated Carrington and found it violated the Consumer Financial Protection Act when they “misrepresented the requirements” of the CARES Act and related federal agency guidelines.
“The company misrepresented to borrowers that they could not have 180 days of forbearance upon request and that certain borrowers could not have forbearance at all. Carrington also implied that homeowners had to make more detailed attestations than were actually required by law, and the company imposed late fees when they were not permitted,” the agency said.
Specific Violations
According to the he CFPB, it found that Carrington:
- Wrongly charged late fees. “Carrington deceived certain borrowers, stating they were required to pay late charges they did not owe while their accounts were in forbearance. Carrington also falsely told borrowers in forbearance that they would “be assessed’ or had “been assessed” late charges. In some cases, Carrington did wrongfully charge late fees,” the CFPB said
- Repeatedly provided false information about pandemic protections. “Carrington told certain homeowners that they were required to remit their monthly payments ‘immediately’ and could be facing foreclosure proceedings if they did not do so. In fact, no payment was required nor could the homeowners face foreclosure proceedings,” the CFPB said. “The company also misrepresented to homeowners that they needed to provide specific reasons in order to obtain a forbearance when they only needed to attest to financial hardship during the pandemic. Carrington also told homeowners that to get a forbearance of more than 90 days, they had to make another request after the first 90 days.”
- “Botched” homeowners’ credit reports. “Carrington illegally furnished information to consumer reporting companies that certain borrowers’ accounts were delinquent, rather than current, even though the homeowners’ accounts were current entering forbearance. Carrington also inaccurately furnished reports on the delinquency of certain homeowners in forbearance who were delinquent at the time they entered forbearance. Carrington failed to promptly notify the big three credit reporting companies about the errors,” the agency said.
Enforcement Action
The CFPB said its investigation found that Carrington violated the Act’s prohibition on deceptive conduct, as well as certain provisions of the Fair Credit Reporting Act and its implementing regulation, Regulation V.
According to the CFPB, the order requires Carrington to:
- Provide redress to consumers. Carrington must conduct an audit to ensure any improperly charged late fees have been refunded to consumers, and if not, to refund them, the agency said.
- Repair its faulty business practices. Carrington must assess customer service staffing and provide training relating to applicable CARES Act and agency and GSE guidelines. The company must also establish policies and procedures to prevent the issues from recurring, the Bureau said.
- Pay $5.25 million in fines. The CFPB said Carrington must pay a $5.25 million penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.
Read the order.
The Very Best in CU Reporting. Every Morning. At a Price Every CFO Will Love
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.