The Consumer Financial Protection Bureau has been pushing back, fining one mortgage servicer $1.6 million for blocking consumers’ efforts to save their homes from foreclosure.
The CFPB claimed in August that Residential Credit Solutions failed to honor loan modifications for mortgages transferred from other servicers, treated consumers who were not in default as if they were, sent borrowers escrow statements falsely claiming they were due a refund and forced consumers to waive their rights in order to get a repayment plan.
“By failing to honor loan modifications already in place, Residential Credit Solutions (not only) put consumers through more headaches but in some cases cost consumers their homes,” alleged CFPB Director Richard Cordray. “Residential Credit Solutions must now compensate its victims $1.5 million as a result of (its) action.”
In addition to the $1.5 million in compensation to its customers, the Fort Worth-based company was ordered to pay a $100,000 civil penalty.
According to an investigation by the New York Times into housing data and court filings, there has been a pattern of complaints against another big name in the private equity space; namely, that it was too quick to begin foreclosure proceedings – whether it had bought a delinquent mortgage at a federal auction or directly from a bank.
But these private equity firms and hedge funds are being criticized for pushing homes into foreclosure prematurely, leaving lawmakers to question why federal agencies are selling loans at a discount of as much as 30% to these firms.