$5.25 million fine assessed against CA mortgage servicer for alleged ‘cheating’ of homeowners

A $5.25 million fine for allegedly cheating homeowners of their rights for mortgage payment forbearance during the height of the coronavirus crisis was announced Thursday by the federal consumer financial protection agency.

The Consumer Financial Protection Bureau (CFPB) said it assessed the fine – along with an order to provide redress to consumers and repair faulty business practices – against Carrington Mortgage Services, a non-bank mortgage servicer headquartered in Anaheim, Calif. The bureau said the firm wrongly charged fees and inaccurately reported homeowner credit information despite COVID-19 pandemic-era housing protections contained in the Coronavirus Aid, Relief, and Economic Security Act (CARES) enacted in March 2020 and in effect through Dec. 30 of that year.

The CFPB said it 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 agency said it also 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 fine, once paid, the agency said, would be deposited into the CFPB’s victims’ relief fund. The redress would require the firm to refund to customers any late fees that were improperly charged and paid, following an audit. To repair Carrington’s faulty business practices, the agency said, the firm must assess customer service staffing and provide training relating to applicable CARES Act and agency and government-sponsored entities (GSE) guidelines. The company must also establish policies and procedures to prevent the issues from recurring, CFPB said.

CFPB Takes Action Against Carrington Mortgage for Cheating Homeowners out of CARES Act Rights