CFPB takes action on CARES Act forbearance violation

As some of you may know, in early 2020, Congress passed the  Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under the CARES Act, borrowers with federally backed mortgage loans could obtain a 180-day forbearance by submitting a request to their mortgage servicer and affirming that they are experiencing a financial hardship during the coronavirus national emergency. During the forbearance period, servicers are prohibited from assessing fees, penalties, or interest above what would have been due under the contract had payments been timely made. A more in depth discussion can be found in this NAFCU blog. While the pandemic and CARES Act forbearances are ending, examination of lender’s and servicer’s conduct regarding the forbearances is not.

On November 17, 2022, the Consumer Financial Protection Bureau (CFPB) announced the filing of a consent order in an administrative proceeding against Carrington Mortgage Services, LLC (Carrington) for violations of the Fair Credit Reporting Act (FCRA), Regulation V, the CARES Act, and the Consumer Financial Protection Act of 2010. According to the order, Carrington is a mortgage servicer that “provided Forbearances pursuant to the CARES Act or Guidelines for over 115,000 borrowers.”

Alleged Conduct

In the order, the CFPB alleges that Carrington engaged in the following conduct:

  • Made false or misleading representation regarding CARES Act forbearance requirements, such as:

 

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