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CFPB Enters Consent Order with National Bank Regarding Alleged Mortgage Servicing Misconduct




by:
Peter L. Cockrell
Greenberg Traurig, LLP - McLean Office

Brett M. Kitt
Greenberg Traurig, LLP - Washington Office

Gil Rudolph
Greenberg Traurig, LLP - McLean Office

J. Scott Sheehan
Greenberg Traurig, LLP - Houston Office

 
July 8, 2014

Previously published on June 25, 2014

On June 17th, the CFPB, along with Department of Justice (DOJ), Department of Housing and Urban Development (HUD), and attorneys general in 49 states and the District of Columbia, filed a proposed consent order in federal court that would resolve allegations of mortgage servicing misconduct at a large national bank.1 The proposed consent order would require the bank to: (i) pay a $10 million fine to cover losses it caused to the Federal Housing Administration, Department of Veterans Affairs, and the Rural Housing Service; (ii) pay $40 million to borrowers whose homes were foreclosed upon; and (iii) provide $500 million in loss-mitigation relief to underwater borrowers. In a parallel settlement with the DOJ, the bank must also pay a $418 million fine.

The complaint alleges that the bank engaged in systemic mortgage servicing misconduct. In filing the complaint, the CFPB is exercising its enforcement authority with respect to entities engaging in unfair, deceptive, or abusive practices. Specifically, the complaint alleges that the bank engaged in following misconduct:

  • Payments and fees: The complaint alleges that the bank failed to promptly and accurately apply borrowers’ payments, and also charged unauthorized fees for default-related services.

  • Loss mitigation: The complaint alleges that the bank did not provide accurate information about its loss mitigation options, and also that the bank failed to properly consider and process borrowers’ loss mitigation applications.

  • Foreclosure practices: The complaint alleges that the bank did not provide accurate information to borrowers about the status of foreclosure proceedings. The bank also allegedly engaged in robo-signing of foreclosure documents.



1See the complaint at http://files.consumerfinance.gov/f/201406_cfpb_complaint_sun-trust.pdf and the proposed consent order at http://files.consumerfinance.gov/f/201406_cfpb_consent-judgement_sun-trust.pdf.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Author
 
Peter L. Cockrell
Brett M. Kitt
Gil Rudolph
J. Scott Sheehan
Practice Area
 
Business Law
Finance
 
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