On June 18, 2024, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it has entered into consent orders with two companies totaling $16.5 million in civil penalties and consumer redress, resolving allegations that those companies failed to properly service reverse mortgages.
The CFPB alleged both companies violated the Consumer Financial Protection Act (CFPA) and the Real Estate Settlement Procedures Act (RESPA) by failing to respond to consumer requests for information. Specifically, the CFPB alleged that "the companies systematically failed to respond to thousands of homeowner requests for loan payoff statements, short sales, deeds-in-lieu of foreclosures, lien releases, and requests for general information." Additionally, the Bureau accused the companies of falsely telling homeowners they were in default, allegedly sending letters notifying homeowners that they had 30 days to repay their reverse mortgage loans and ignoring attempts by borrowers to contest this information.
The CFPB entered separate consent orders against each company. One company, and its subsidiaries, agreed to pay $11.5 million in consumer redress and $5 million in civil penalties; additionally, only one subsidiary will be allowed to continue servicing reverse mortgages and only under strict compliance requirements. The second company is permanently banned from advertising, marketing, promoting, offering, selling, or otherwise servicing reverse mortgages. A $16.5 million civil money penalty was suspended based on this company's sworn and documented inability to pay, and instead a $1 civil penalty was imposed.
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