Consumer Bureau takes action against mortgage servicer for deceptive practices
The Consumer Financial Protection Bureau (CFPB) has announced an enforcement action against mortgage servicer Carrington Mortgage for what the bureau calls deceptive acts and practices. Specifically, 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.
Carrington will pay a $5.25 million fine to the CFPB's victim relief fund.
“Carrington Mortgage unlawfully withheld legally mandated pandemic protections, wrongly imposed fees, and reported false information to credit reporting companies,” said CFPB Director Rohit Chopra. “Homeowners were misled and denied key protections at a time when they were in most need of help.”
Specific harms included wrongly charged late fees and botched credit reports.
According to the CFPB, 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.
Additionally, 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.
In addition to the fine, Carrington must:
- 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.
- 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.
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