CFPB - Consumer Financial Protection Bureau
08/21/2024 | Press release | Distributed by Public on 08/21/2024 14:00
Enforcement Action (Fay Servicing, LLC)
On August 21, 2024, the Bureau issued an order against Fay Servicing, LLC, a residential mortgage servicer headquartered in Tampa, Florida. On June 7, 2017, the Bureau previously issued an order against Fay Servicing to address the Bureau's findings that Fay Servicing failed to provide mortgage borrowers with the protections against foreclosure required by law, kept borrowers in the dark about critical information about the process for applying for foreclosure relief, and moved forward with the foreclosure process while borrowers were actively seeking help to save their homes. In this action, the Bureau found that Fay Servicing violated the Bureau's 2017 order, Regulation X, which implements the Real Estate Settlement Procedures Act, and the Consumer Financial Protection Act of 2010 (CFPA) by, among other things, taking prohibited foreclosure actions against borrowers engaged in loss mitigation and preventing borrowers from taking advantage of all loss mitigation options available to them. Specifically, the Bureau found that Fay Servicing 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 Bureau also found that Fay Servicing engaged in additional violations of Regulation X by engaging in prohibited foreclosure activity against borrowers entitled to foreclosure protections and failing to maintain adequate policies and procedures. The Bureau also found that Fay Servicing engaged in unfair practices by failing to inform borrowers how their indicated preference for retention or non-retention options, or lack thereof, could limit available loss mitigation options. Finally, the Bureau found that Fay Servicing violated multiple provisions of the Homeowners Protection Act, Regulation X, Regulation Z (which implements the Truth in Lending Act), and the CFPA's prohibition on unfair and deceptive practices in its administration of private mortgage insurance and assessment of late fees. The order requires Fay Servicing to stop its illegal practices and improve its servicing technology and compliance management systems. The order also puts limitations on compensation to Edward Fay, Fay Servicing's founder, CEO, and Chairman of the Board, if Edward Fay does not take actions necessary to ensure compliance with the order. The order also requires Fay Servicing to pay $3 million in consumer redress, a $2 million civil money penalty, and to invest $2 million to update its servicing technology and compliance management systems.