CFPB Crusade Against “Junk” Fees Continues in Examinations of Mortgage Servicers

  • The CFPB announced that in its examination of mortgage servicers, it found that certain servicers violated truth-in-lending and other consumer protection laws designed to keep homeowners in their homes by charging homeowners hidden “junk” or other improper fees and sending deceptive notices to consumers.
  • The CFPB’s report, resulting from examinations conducted between April 1, 2023 and December 31, 2023, found that mortgage servicers engaged in a range of improper conduct, including unlawfully charging property inspection fees, failing to waive late fees and penalties as required following acceptance of COVID-19 loan modifications, using the label “service fee” without descriptions, failing to make timely escrow disbursements that caused consumers to accrue penalties, sending inadequate notices to consumers regarding loss mitigation options and missed payments, and failing to adequately document certain servicing actions or establish timely live contact with delinquent borrowers.
  • In response to the CFPB’s findings, servicers are reportedly taking corrective actions, including refunding improper fees or late charges, reviewing delinquent loans to ensure borrowers are offered loss mitigation options, revising policies and procedures regarding consumer notices, and enhancing training and monitoring.
  • We have recently covered the FTC’s planned hearing on its proposed Trade Regulation Rule on Unfair or Deceptive Fees that aims to curb “junk” fees, as well as other legislative and regulatory actions regarding hidden fees in bank deposits and lending markets, and ticket sales, food and beverage sales, and lodging accommodations.