Bureau fines Carrington Mortgage Services $5.25M

The CFPB has issued a Consent Order against Carrington Mortgage Services LLC for deceptive acts or practices under the Consumer Financial Protection Act in connection with mortgage forbearances.

Carrington Mortgage Services is a non-bank mortgage servicer headquartered in Anaheim, California. Carrington 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). As of September 2020, Carrington serviced nearly half a million federally backed mortgage loans: more than 65% were Federal Housing Administration loans, nearly 20% were U.S. Department of Agriculture loans, slightly more than 10% were Veterans Benefits Administration loans, and about 5% were loans backed by 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. The company misrepresented to borrowers that they could not have 180 days of forbearance upon request and that certain borrowers could not have forbearance at all. Carrington also implied that homeowners had to make more detailed attestations than were actually required by law, and the company imposed late fees when they were not permitted.

Specifically, the CFPB found that Carrington:

• Wrongly charged late fees: Carrington deceived certain borrowers, stating they were required to pay late charges they did not owe while their accounts were in forbearance. Carrington also falsely told borrowers in forbearance that they would “be assessed” or had “been assessed” late charges. In some cases, Carrington did wrongfully charge late fees.
• Repeatedly provided false information about pandemic protections: Carrington told 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 fact, no payment was required nor could the homeowners face foreclosure proceedings. The company also misrepresented to homeowners that they needed to provide specific reasons in order to obtain a forbearance when they only needed to attest to financial hardship during the pandemic. Carrington also told homeowners that to get a forbearance of more than 90 days, they had to make another request after the first 90 days.
• Botched homeowners’ credit reports: Carrington illegally furnished information to consumer reporting companies that certain borrowers’ accounts were delinquent, rather than current, even though the homeowners’ accounts were current entering forbearance. Carrington also inaccurately furnished reports on the delinquency of certain homeowners in forbearance who were delinquent at the time they entered forbearance. Carrington failed to promptly notify the big three credit reporting companies about the errors.

The order requires Carrington to:

• Provide redress to consumers: Carrington must conduct an audit to ensure any improperly charged late fees have been refunded to consumers, and if not, to refund them.
• Repair its faulty business practices: Carrington must assess customer service staffing and provide training relating to applicable CARES Act and agency and GSE guidelines. The company must also establish policies and procedures to prevent the issues from recurring.
• Pay $5.25 million in fines: Carrington must pay a $5.25 million penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.