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CFPB Sues Large Nonbank Mortgage Loan Servicer

Thu 27 Apr, 2017  /  by McIntyre & Lemon  /   Client Alerts

04/27/17 – The Consumer Financial Protection Bureau (CFPB) has sued one of the country’s largest nonbank mortgage loan servicers and its subsidiaries for faulty mortgage servicing.

The defendant, headquartered in West Palm Beach, Fla., specializes in servicing subprime or delinquent loans. As of Dec. 31, 2016, the company serviced almost 1.4 million loans with an aggregate unpaid principal balance of $209 billion. It services loans for borrowers in all 50 states and the District of Columbia.

The CFPB alleges that the defendant’s engaged in years of widespread errors related mortgage servicing. The mortgage loan servicer allegedly failed at sending accurate monthly statements, properly crediting payments, and handling taxes and insurance. Allegedly, the defendant also illegally foreclosed on borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records.

The CFPB complaint, filed in federal district court for the Southern District of Florida, seeks a court order requiring the mortgage loan servicer to follow mortgage servicing law, provide relief for consumers, and pay penalties.

The Florida Attorney General took a similar action against the defendant in a separate lawsuit. Many state financial regulators are also independently issuing cease-and-desist and license revocation orders against the defendant for escrow management and licensing issues.

CFPB Press Release, Complaint.