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In This List

Popular Inc. discloses breach of CFPB rules related to mortgage disclosures

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Popular Inc. discloses breach of CFPB rules related to mortgage disclosures

In its 2017 annual report, Popular Inc. said it accidentally violated Consumer Financial Protection Bureau rules by failing to provide written notification to mortgage borrowers submitting loss-mitigation applications. The Hato Rey, Puerto Rico-based company blamed a systems interface error for the approximately three-year period during which it did not send updates to borrowers with issues making loan payments.

Popular says it has corrected the issue, reached out to potentially affected borrowers and notified the relevant regulators. The company estimates the error applied to about 20,000 residential mortgage loans, of which about 50% are serviced by Popular for third parties. Popular insists half of all borrowers that may have been affected by the error still found alternatives to loan payments, adding that the company did use email and hand delivery at bank branches to reach out to borrowers.

The company, which estimates its possible legal-related losses at a high end of $27.8 million as of the end of 2017, also provided a number of updates on recent lawsuits.

Two putative class actions concerning its mortgage lending, one concerning lengthy loss mitigation processes and the other concerning mortgages acquired in its Federal Deposit Insurance Corp.-assisted acquisition of Doral Bank, are still pending.

Banco Popular de Puerto Rico also wrapped up one of three putative class-action lawsuits not related to mortgage lending. In May 2017, plaintiffs in Morales v. Banco Popular de Puerto Rico alleged the company forced-placed hazard insurance on mortgaged properties in violation of the Truth in Lending Act and the Racketeer Influence and Corrupt Organizations Act. On Dec. 29, 2017, a court granted the bank's motion for summary judgment and the plaintiffs did not appeal.

The other two nonmortgage lawsuits are still pending. One case concerns Popular Inc, Banco Popular de Puerto Rico and Popular Insurance LLC for failing to reimburse insurance agents and mortgagees for commissions paid in policy years when no claims were filed against their hazard insurance policies. A follow-up hearing was scheduled for March 6. The other class action alleges that the company failed to sufficiently disclose and offer customers a government-approved product reimbursing customers on their insurance deductibles.

Banco Popular de Puerto Rico also disclosed, in conjunction with other local banks, Chapter 11 bankruptcy proceedings initiated in June 2017 against Betteroads Asphalt and Betterecycling Corp.. The debtors counterclaimed damages in excess of $900 million. A court is currently in the discovery process for the case.