The CFPB took action against Paymap, a payment processing company, and LoanCare, servicing company. Paymap will return $33.4 million in fees to consumers and pay a $5 million penalty to the CFPB, while LoanCare will pay a $100,000 civil penalty.
“Deceptive advertising has no place in the financial marketplace,” CFPB Director Richard Cordray said. “Today’s action is delivering relief for consumers deceived by PayMap and LoanCare, and sending a clear message that these practices will not be tolerated.”
Together, Paymap and LoanCare marketed and provided the “Equity Accelerator” program to LoanCare customers. The companies advertised that borrowers who enrolled in the program would receive a biweekly payment schedule that would lead to significant interest savings. However, the program didn’t make more frequent payments on cunstomers’ mortgages, and “Paymap’s prominent claims of tens of thousands of dollars in interest savings were made without any supporting evidence,” according to the CFPB.
According to the CFPB, Paymap and LoanCare:
- Lured customers with deceptive promises of savings: Paymap claimed that average customers would see $33,000 in interest savings without any evidence to support the claim. Only a small percentage – if any – of its customers saw that amount in savings, according to the CFPB.
- Misled customers about when their payments would be applied: Consumers were told that the Equity Accelerator program would change their payoff schedule to every two weeks. However, “although Paymap makes more frequent withdrawals from consumers’ accounts in the Equity Accelerator program, it does not actually make more frequent payments on consumers’ mortgages,” according to the CFPB. “Instead, Paymap holds the collected payments in custodial accounts, and then pays consumers’ mortgages on their original monthly schedule.” Customers are also charged a transaction fee for every withdrawal.
The Consumer Financial Protection Bureau has fined two companies a combined $38.5 million for falsely advertising a mortgage payment program that promised to save consumers thousands of dollars in interest if they made more frequent mortgage payments.