On November 17, 2022, the CFPB took action against Carrington Mortgage Services for deceptive acts or practices under the Consumer Financial Protection Act in connection with mortgage forbearances. According to the CFPB, Carrington failed to implement many protections, provided to borrowers with federally backed mortgage loans who were experiencing financial hardship, during the COVID-19 public health emergency.
From CFPB Director Rohit Chopra’s 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 Mortgage Services is a non-bank mortgage servicer that operates in all 50 states and services a large number of federally backed mortgage loans, which are made or guaranteed by federal agencies or government-sponsored entities (GSEs). The CFPB investigated Carrington and found they violated the Consumer Financial Protection Act when they misrepresented the requirements of the CARES Act and related federal agency guidelines.
In particular, the CFPB found that Carrington:
Wrongly charged late fees. The CFPB alleges that Carrington deceived certain borrowers by stating they were required to pay late charges they did not owe, told borrowers in forbearance that they would “be assessed” or had “been assessed” late charges and in some cases, wrongfully charged late fees.
Repeatedly provided false information about pandemic protections. The CFPB also found that the company deceived consumers by telling certain homeowners that they were required to remit their monthly payments “immediately” and could be facing foreclosure proceedings if they did not do so. In addition, it also misrepresented to homeowners that they needed to provide specific reasons in order to obtain a forbearance and that borrowers could not have 180 days of forbearance upon request.
Botched homeowners’ credit reports. It was also found that Carrington inaccurately reported the forbearance status of borrowers to the big three credit reporting companies: Equifax, Experian, and TransUnion.
Thus, the CFPB is ordering Carrington to repay any late fees not already refunded to consumers, repair its faulty business practices, and pay a $5.25 million penalty that will be deposited into the CFPB’s victims relief fund.
Read the CFPB’s press release here.
The consent order can be found here.