CFPB Spanks Carrington Mortgage With A $5.25 Million Fime For Cheating Homeowners Of Their Rights Under The CARES Act

CFPB spanks Carrington Mortgage Services with a $5.25 million fine! Yep, you heard that right. The CFPB claimed Carrington Mortgage committed improper practices related to forbearance plans during the Covid-19 pandemic.

CFPB’s director Rohit Chopra said in a statement:

Carrington Mortgage unlawfully withheld legally mandated pandemic protections, wrongly imposed fees, and reported false information to credit reporting companies. Homeowners were misled and denied key protections at a time when they were in most need of help.

Carrington services many federally backed mortgage loans.

The company said it is settling without admitting or denying the CFPB’s claims. They want to put this matter behind it and avoid the cost and distraction of prolonged litigation. 

The CFPB claims the servicer denied forbearance for some borrowers. The agency also says Carrington did not allow others to have 180 days upon request. The company also deceived consumers about their options. The CFPB alleges Carrington required homeowners to remit their monthly payments immediately. Then threatened them with foreclosure if they did not. 

In addition, CFPB said Carrington misled borrowers into paying improper late fees when in forbearance. The lender also inaccurately reported borrowers’ statuses to credit reporting agencies as “delinquent” instead of “current.”  forbearance.

CFPB Spanks Carrington Mortgage For Violating The CARES Act

The Cares Act required servicers to provide forbearance plans to borrowers facing hardships during the Covid-19 pandemic. Millions of U.S. homeowners applied for the programs with their servicers.

Carrington implemented the complex Cares Act regulatory requirements. However, they offered little to no guidance to homeowners. 

Carrington claims it completed more than 134,000 forbearance agreements. The company claims over 94% of homeowners successfully resolved their delinquency after forbearance. 

Carrington Founder and CEO told Housingwire:

The CFPB, fails to understand the business. It uses extortion tactics as its primary tool for regulation which does nothing to help the industry or consumers. This matter is an aggressive and unfortunate example of regulatory overreach,” 

The U.S. Court of Appeals for the Fifth Circuit recently declared the CFPB’s funding source unconstitutional. The bureau receives funding through the Federal Reserve rather than appropriations legislation passed by Congress.

The settlement requires that Carrington conduct an audit to identify borrowers improperly charged with late fees who still need to be refunded. The company will also improve its staff training and establish procedures to prevent the issues from recurring.

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