The Consumer Financial Protection Bureau (CFPB) has ordered Florida-based Fay Servicing to pay a $2 million fine for violating mortgage servicing laws and failing to comply with a 2017 agency order related to illegal foreclosure practices.
In the 2017 order, Fay Servicing was found to have engaged in prohibited foreclosure actions, neglected to offer available mortgage assistance to borrowers, and overcharged for private mortgage insurance, all in violation of the CFPB's servicing rules.
In its latest action against Fay, the CFPB cited the company as having "failed to implement the 2017 Order’s requirements, including ensuring that it did not engage in prohibited foreclosure activity; properly maintaining data about borrowers’ loss mitigation applications; and developing written policies and procedures to ensure compliance." The CFPB determined that Fay Servicing violated the 2017 order, the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Homeowners Protection Act, and the Consumer Financial Protection Act.
Announced in a release yesterday and filed as a consent order, the CFPB not only imposed the civil money penalty but mandated an additional $3 million be paid to redress consumers, including a $2 million investment to enhance the company's servicing technology and compliance systems. The order places limits on CEO Edward Fay's compensation if he does not ensure compliance.
“We have helped thousands of homeowners across the country stay in their homes using borrower-friendly processes that are at the center of this matter, and that were disclosed to the CFPB as far back as 2017," said Mike Wojcik, Fay Servicing's chief marketing officer, in a statement. The company "made a business decision to settle" and disagrees with the CFPB's claims. "However, after a decade of cooperation and transparency with the CFPB, including throughout this investigation, we were faced with a choice: engage in a lengthy litigation process to defend our record, or agree to a resolution that, without admitting to the Bureau’s claims, would allow us to move forward. We chose to settle this case so that we can focus our time and efforts on supporting borrowers."
Rohit Chopra, director of the CFPB, said in the Bureau's press release, “Fay Servicing ignored a law enforcement order by taking steps to foreclose on homeowners who are shielded by housing protection laws. The CFPB’s order will put the CEO’s pay at risk if Fay continues to break the law."
Wojcik added, "The CFPB’s heavy-handed approach is one our industry is all too familiar with, and in this case, does nothing to help borrowers or the industry. At the same time, the CFPB’s decision to reference our CEO in this resolution is a tactic based on an agenda item to include CEOs, albeit one that it seems to apply to smaller companies. We are proud of our record and our team’s commitment to borrowers. While we disagree with the CFPB’s positions, we are pleased to put this matter behind us so that we can remain focused on what we do best: supporting homeowners across the country, including during times of financial hardship.”
