CFPB continues to take action against mortgage servicers who don’t play by the rules

Earlier this month, the CFPB issued a consent order against yet another mortgage servicer. The order claims that Fay Servicing, LLC (Fay) failed to inform borrowers of certain foreclosure protections, did not provide required notices informing borrowers of their options to save their homes and moved forward with the foreclosure process in violation of the mortgage servicing regulations. The CFPB ordered Fay to stop their illegal practices, create policies and procedures to ensure compliance with the mortgage servicing regulations and pay $1.15 million to harmed borrowers.

Applicable Laws. Regulation X provides a number of requirements for mortgage loan servicers. Section 1024.38 generally requires servicers to have policies and procedures in place that ensure the servicer complies with the mortgage servicing regulations. Among other things, the rule requires that these policies and procedures be reasonably designed to ensure the servicer provides timely notices and accurate information to borrowers, properly evaluates loss mitigation applications and identifies all loss mitigation options available to a borrower.

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