WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has levied a $2 million penalty against Fay Servicing for breaching mortgage servicing laws and failing to comply with a 2017 agency order addressing illegal foreclosure practices. The enforcement action underscores Fay Servicing’s disregard for legal obligations intended to protect vulnerable borrowers.
The CFPB found that Fay Servicing engaged in prohibited foreclosure activities against borrowers who sought mortgage assistance. The company failed to provide eligible borrowers with available mortgage assistance options and overcharged them for private mortgage insurance. These actions violated the Real Estate Settlement Procedures Act, the Truth in Lending Act, and the Homeowners Protection Act.
Beyond the civil penalty, the CFPB’s order mandates Fay Servicing to pay $3 million in consumer redress. The company must also invest $2 million to enhance its servicing technology and compliance management systems. The order places constraints on CEO Edward Fay’s compensation if he fails to ensure compliance with these mandates.
CFPB Director Rohit Chopra emphasized the gravity of Fay Servicing’s actions, stating “Fay Servicing ignored a law enforcement order by taking steps to foreclose on homeowners who are shielded by housing protection laws.” The 2017 order required Fay Servicing to offer foreclosure relief and inform borrowers adequately about their options. Despite this, the company repeated its previous infractions, perpetuating harm to consumers.
This week’s order seeks to enforce consumer protection laws and hold nonbank financial institutions accountable. Fay Servicing’s penalties and required operational changes aim to prevent future violations and secure the financial interests of mortgage borrowers nationwide.
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