The Consumer Protection Office for Finance (CFPB) has a case involving Florida-based Fay Maintenance for illegal conduct in foreclosure proceedings. The deal includes a $2 million fine and possible restrictions on the CEO’s compensation.
A company spokesman wrote to HousingWire “Fay continues to strongly disagree with the CFPB’s allegations in this matter, but we have decided to settle for business reasons.”
“While we disagree with the CFPB’s positions, we are pleased to put this matter behind us so we can continue to focus on what we do best: supporting homeowners across the country, including during times of financial difficulty,” the spokesperson added.
A CFPB order issued Wednesday alleges violations of mortgage servicing laws and a previous 2017 order addressing the same issue. Fay Servicing “has failed to implement the 2017 actions and continues to violate the law,” the CFPB alleges.
The company was also ordered to pay its customers $3 million, invest at least $2 million in modernizing its technology and compliance management systems, and cap the compensation of Chairman and CEO Edward Fay if he fails to ensure compliance with the current order.
In 2017, the CFPB accused Fay Servicing of failing to provide foreclosure protection to borrowers and keeping them “in the dark” about important information about the foreclosure protection application process. At the time, the CFPB ordered the company to stop its illegal practices and pay affected customers $1.15 million.
However, the current order states that Fay Servicing failed to stop foreclosures in a timely manner and that the company did not develop written policies and procedures to ensure compliance.
It also mentions that borrowers who sought loss mitigation options were not informed by Fay Servicing about how their preference might limit the options the company would consider them for.
In addition, the company failed to collect private mortgage insurance on time and charged higher late fees than stipulated in the mortgage contracts.
“Fay Servicing ignored a law enforcement order by taking steps to foreclose on homeowners protected by housing protection laws,” CFPB Director Rohit Chopra said in a statement. “The CFPB’s order puts the CEO’s salary at risk if Fay continues to violate the law.”
The company spokesperson said Fay “has helped thousands of homeowners across the country stay in their homes using the borrower-friendly processes at the heart of this matter that were disclosed to the CFPB back in 2017.”
“However, after a decade of cooperation and transparency with the CFPB, including during this investigation, we faced a decision: engage in a lengthy litigation process to defend our record or agree to a resolution that allows us to move forward without admitting the bureau’s claims. We have decided to settle this case so that we can focus our time and efforts on assisting borrowers.”
The spokesperson added: “The CFPB’s hard-line approach is all too familiar to our industry and, in this case, does not help borrowers or the industry. At the same time, the CFPB’s decision to mention our CEO in this resolution is an agenda item-based tactic to target CEOs, albeit one that appears to be disproportionately applied to smaller companies.”
