The Consumer Financial Protection Bureau ordered mortgage servicer Fay Servicing LLC to pay about $1.2 million to mortgage borrowers it failed to inform about foreclosure relief.
"The bureau found that Fay violated the CFPB's servicing rules by keeping borrowers in the dark about critical information about the process of applying for foreclosure relief," CFPB Director Richard Cordray said in a statement.
The bureau also found that the company began foreclosure proceedings while borrowers were seeking help to save their homes. Servicers are prohibited from starting the foreclosure process for a stipulated period of time when borrowers submit a complete and timely application for relief.
Mortgage servicers are required to send an acknowledgment notice when they receive an application for foreclosure relief. The notice must state whether and what additional documents are required. Once the application is complete, servicers must also send an evaluation notice that spells out what foreclosure relief options are on offer, the deadline to accept or reject the offer, and the borrower's rights to appeal a servicer's decision to deny certain types of relief.
The bureau said Fay failed to send acknowledgment notices and evaluation notices to borrowers in a timely manner. It also said the company inaccurately stated borrowers' right to appeal the denial of any loan modification.