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CFPB fines company $1.6 million for creating loan modification purgatory

mpamag.com | August 16, 2015

By Ryan Smith

The Consumer Financial Protection Bureau has fined a mortgage servicer $1.6 million for blocking consumers’ efforts to save their homes from foreclosure.

The CFPB claims that Residential Credit Solutions failed to honor loan modifications for mortgages transferred from other servicers, treated consumers who were not in default as if they were, sent borrowers escrow statements falsely claiming they were due a refund and forced consumers to waive their rights in order to get a repayment plan.

“By failing to honor loan modifications already in place, Residential Credit Solutions (not only) put consumers through more headaches but in some cases cost consumers their homes,” said CFPB Director Richard Cordray. “Residential Credit Solutions must now compensate its victims $1.5 million as a result of our action.”

In addition to the $1.5 million in compensation to its customers, the Fort Worth-based company will also pay a $100,000 civil penalty.

Residential Credit Solutions is a national servicing company with about $95 million in total assets, according to the CFPB. Since 2009, about 75,000 borrowers have had their loans transferred to the company, which specializes in servicing delinquent and “credit-sensitive” residential loans, where the borrower is at high risk for default.

According to the CFPB, the company engaged in illegal practices when servicing loans it acquired from other servicers. On many occasions, it failed to honor trial loan modifications from prior servicers, instead requiring borrowers to prove that they qualified all over again.

“The company put consumers in a loan modification trail period purgatory and confused customers about the status of their modifications, making it difficult for them to take appropriate action,” the CFPB said in a statement. “In many cases, the company delayed or deprived borrowers of the opportunity to save or sell their homes.”

According to the CFPB, since January of 2009, the company has:

  • Failed to honor in-process modifications
  • Provided incorrect information
  • Misrepresented to customers that they had extra money in escrow and were due a refund
  • Forced customers to waive rights in order to get a payment plan

Under the CFPB’s order, the company will be forced to help affected customers preserve their homes, honor prior loss mitigation agreements and adhere to rigorous servicing transfer requirements.

 

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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