Reverse mortgages were in the crosshairs of the Consumer Financial Protection Bureau yesterday, with the regulator announcing two separate enforcement actions against a three different companies. The three companies will pay nearly $20 million in fines and penalties and two of the companies have been banned from servicing reverse mortgages going forward. Here is a breakdown:
- Freedom Mortgage will pay $3.95 million after it was found to be submitting “error-riddled” data to regulators in violation of the Home Mortgage Disclosure Act. This is the second enforcement action against the company for issues with its compliance management system that led to the data being misreported.
- Sutherland Global and NOVAD Management Consulting will both cease servicing reverse mortgages and Sutherland Global and its affiliates will pay $16 million in fines and penalties because the companies did not have adequate resources to handle requests for information from customers and for sending false repayment letters to customers stating that the balance of their loans were due in 30 days because the loans had defaulted, when no such default had occurred.
- For those wondering why Sutherland Global is paying $16 million and NOVAD isn’t paying anything, NOVAD declared it was unable to pay any fine. The company will pay $1 to the CFPB’s victim relief fund, which will make its customers eligible for relief in the future.
Reverse mortgages might not be that similar to accounts receivable management, but these enforcement orders further illustrate the CFPB’s intent on going after repeat offenders and its commitment to making sure consumers are treated fairly. There is also a comment from Rohit Chopra that might sound eerily familiar to comments he has made about consumers and their interactions with debt collectors.
“Sutherland and NOVAD were unprepared to support the hundreds of thousands of older homeowners whose reverse mortgages the defendants were responsible for,” Chopra said. “The defendants ignored complaints and calls for help, and they let problems snowball into disasters. Older homeowners did not choose Sutherland and NOVAD as their reverse mortgage servicer, and the CFPB is holding these defendants accountable for their unlawful neglect.”
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