this Consumer Financial Protection Bureau (CFPB) Issues Enforcement Order Last Month Against Former Home Equity Conversion Mortgage (HECM) Servicing Contractor Noward Management Consulting and subcontractors sutherland global The bureau called it “illegal activity that harms elderly homeowners and causes them to fear losing their homes.” One lawyer said the decision could have broad implications for mortgage servicing.
In an article published national law reviewAttorney Jonathan R. Kolodziej Bradley Arant Bolt Cummings LLP said the order could have wide-ranging implications, particularly as it relates to determining what constitutes abusive behavior towards borrowers.
“The current CFPB administration has laid the foundation for this line of thinking through various statements and guidance documents, but Public Order is the first time it has formally taken action against loan servicers,” Kolodziej wrote. “While the consent order covers reverse mortgage servicers, The implications of this liability theory are far-reaching and certainly not limited to reverse mortgages.”
The bureau said the ineffective loan servicing met the criteria for abuse, he wrote.
“Relate this to elements of abusive behavior or practices [Consumer Financial Protection Act (CFPA)]The CFPB explains, “Failure to respond to inquiries from reverse mortgage borrowers harms consumers’ ability to protect their benefits with reverse mortgages.” Additionally, ‘[c]Consumers have no choice to have [the servicer] to service their reverse mortgage loans and not be able to protect their interests by choosing a different servicer,” he explained.
The CFPB alleges that the servicer “gained an unreasonable advantage by avoiding the costs of providing adequate resources and personnel to its loan servicing operations,” resulting in the bureau’s alleged abusive conduct in failing to adequately service the loans of these borrowers.
“The implications of the rationale underlying the CFPB’s NOVAD consent order could be far-reaching,” Kolodziej said. “While the consent order was between the CFPB and a single reverse mortgage servicer, it would be wrong to believe that the same argument could not be made against other types of third-party servicers. In fact, among the arguments relied upon by the CFPB, HECM There is nothing specific or unique about reverse mortgage products.
He added, “It now appears that any ineffective performance of the service’s duties may result in abuse claims. The consent order further demonstrates that the service’s duties are not limited to matters required by law.”
According to the initial enforcement order, Sutherland and its subsidiaries will “pay $11.5 million in restitution to affected consumers and [the order] All companies are required to pay civil penalties of approximately $5 million, which will be deposited into the CFPB’s Victim Relief Fund.
Since NOVAD declared an inability to pay, its fine was capped at $1. The $1 fine allows the “CFPB [to] Makes consumers eligible for additional relief from the CFPB Victim Relief Fund in the future,” the bureau explained.
NOVAD declined to comment after the order was made public. In a statement, a representative for Sutherland told house line The company entered into a voluntary agreement with the CFPB for work it performed as a subcontractor for NOVAD and agreed to pay, but disagreed with the CFPB’s findings and denied its allegations.
