CFPB Issues Consent Orders Against Reverse Mortgage Servicers
Earlier this month, the CFPB issued consent orders with two reverse mortgage servicers (the Companies), servicing loans as part of a contract with HUD. These orders stem from alleged systemic failures by the Companies to respond to thousands of homeowner requests for assistance, resulting in financial harm to elderly borrowers, including some borrowers losing out on home sales and paying unnecessary costs.
Mortgage servicers – especially those working in reverse mortgage servicing – are required by federal law to respond to consumer requests for assistance in a timely manner. However, according to the CFPB, borrowers were unable to get in contact with anyone working at the Companies. As alleged, these Companies, “failed to respond to thousands of homeowner requests for loan payoff statements, short sales, deeds-in-lieu of foreclosures, lien releases, and requests for general information.” Even when confronted with these failures, the Companies continued to ignore borrowers’ attempts to address and correct false repayment letters erroneously sent to those seeking payoff statements from the Companies.
The CFPB’s consent orders ban the Companies and their subsidiaries from engaging in reverse mortgage activities and create strict compliance requirements for future activities. The Orders also impose a civil penalty of $11.5 million with approximately half of the civil penalties to be deposited in the CFPB’s victim’s relief fund.
The Companies consented to issuance of the consent orders without admitting any of the CFPB’s findings of facts or conclusions of law.
