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CFPB Acts against Residential Solutions for Blocking Consumers’ Attempts to Save Their Homes
Friday, July 31, 2015 6:30 AM

Yesterday, the Consumer Financial Protection Bureau took action against Residential Credit Solutions, Inc. for blocking consumers’ attempts to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they weren’t, sent consumers escrow statements falsely claiming they were due a refund, and forced consumers to waive their rights in order to get a repayment plan. Residential Credit Solutions has agreed to pay $1.5 million in restitution to victims and a $100,000 civil money penalty for its illegal actions.

Residential Credit Solutions, headquartered in Fort Worth, Texas, is a national mortgage servicing company with about $95 million in total assets. Since 2009, approximately 75,000 borrowers have had their loans transferred to Residential Credit Solutions.

Residential Credit Solutions’ failures as a mortgage servicer violated the Consumer Financial Protection Act. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. The order requires Residential Credit Solutions to, among other things:

  • Pay $1.5 million in redress to victims.
  • Engage in efforts to help affected borrowers preserve their home and stop foreclosure processes for certain borrowers, if those are happening.
  • Honor prior loss mitigation agreements.
  • End all mortgage servicing violations and stop making misrepresentations to consumers regarding loss mitigation, such as false statements about how much is owed.
  • Adhere to rigorous servicing transfer requirements.
  • Make loss mitigation applications readily available and adequately train personnel in loss mitigation procedures.
  • Pay $100,000 civil penalty payment to the CFPB’s Civil Penalty Fund.

Read more about this case on the CFPB site.

See a copy of the consent order.