Maryland Legal Alert for Financial Services
CFPB Focus on Mortgage Servicing Deficiencies
The Consumer Financial Protection Bureau (CFPB) recently released a second Spring 2024 “Supervisory Highlights” issue. The CFPB’s first Spring 2024 issue highlighted several deficiencies by furnishers of credit data to credit reporting agencies (CRAs), including the failure to comply with provisions of the Fair Credit Reporting Act (FCRA) and its implementation of Regulation V (see our prior Maryland Legal Alert for more information). The CFPB’s second Spring 2024 issue highlights mortgage servicing deficiencies. These deficiencies included: (a) improperly charging property inspection fees for Fannie Mae loans where Fannie Mae guidelines prohibited imposition of such fees; and (b) assessing “unfair” late charges (either in excess of what was provided in the applicable loan documents or where borrowers had entered into loss mitigation agreements). The CFPB also noted instances where mortgage servicers failed to provide adequate descriptions of fees on periodic account statements (e.g., using “service fee” as the only label for a fee, when Regulation Z requires a brief description of applicable fees).
The second Spring 2024 issue also identified situations where mortgage servicers had not made timely disbursements from borrower escrow accounts. The CFPB noted and found fault with situations where mortgage servicers sent escrow disbursements that did not reach the intended payees, but failed to resend the payments promptly after learning of the first failed payment attempt (resulting in third party late fees and other penalties for borrowers).
For more information, contact Christopher R. Rahl or Tamia J. Morris.