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Homeowners who were trying to avoid foreclosure were ill-served

According to the Consumer Financial Protection Bureau (CFPB,) a company that promised to assist homeowners who were at risk of losing their homes failed to meet that obligation. An investigation into the matter found numerous violations of loan servicing regulations, and resulted in a fine of more than $1 million. The move should serve as a cautionary tale for Washington homeowners who are facing serious financial strain, and looking for ways to avoid losing their home to foreclosure.

The action was taken against Fay Servicing, a company that has worked with more than 85,000 borrowers over the past decade. An investigation completed by the CFPB found that Fay Servicing kept borrowers in the dark in regard to their foreclosure prevention opportunities. In addition, the company moved forward with foreclosure proceedings on borrowers who were actively seeking foreclosure relief options, which is in violation of CFPB regulations.

Fay Servicing reached an agreement with the CFPB to pay borrowers $1.15 million in redress. In addition, the company will contact affected borrowers and advise them on their foreclosure avoidance options. They are also expected to create and implement policies and procedures that will comply with existing laws, and create a way to accurately track information and data that demonstrates that compliance.

Fay Servicing responded to news of the agreement by taking issue with the use of the word "fines." They argue that very few borrowers were affected, and that those borrowers were "well served" by the company. That response should sound a warning to borrowers in Washington and elsewhere who are concerned about how their own loan servicing company would respond to a sudden change in financial circumstances, and the risk of foreclosure.

Source: housingwire.com, "CFPB hits Fay Servicing with $1.15 million fine for illegal foreclosure practices", Ben Lane, June 7, 2017

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