Banking and Finance Law Daily CFPB settles with mortgage servicer for RESPA, CFPA, Truth in Lending violations
Thursday, May 30, 2019

CFPB settles with mortgage servicer for RESPA, CFPA, Truth in Lending violations

By Colleen M. Svelnis, J.D.

Mortgage servicer BSI Financial Services agrees to a consent order with the CFPB to settle charges related to its business of handling mortgage servicing and transfers.

The Consumer Financial Protection Bureau has announced a settlement with mortgage service provider Servis One, Inc., doing business as BSI Financial Services (BSI). The Bureau found that BSI violated the Consumer Financial Protection Act of 2010, the Real Estate Settlement Procedures Act (RESPA), or the Truth in Lending Act related to mortgage loan servicing transfers. Under the terms of the consent order, BSI agreed to pay a civil money penalty of $200,000 and pay restitution estimated to be at least $36,500. The company also must establish and maintain a comprehensive data integrity program to ensure the accuracy, integrity, and completeness of the data for loans that it services, and implement an information technology plan.

The Bureau initiated administrative proceedings after identifying multiple violations by BSI. According to the Consent Order, BSI outsourced to two mortgages service providers the responsibility of determining the correct property tax and homeowner’s insurance premium payments for BSI to pay. However, BSI did not conduct adequate periodic reviews of these providers to ensure they were directing BSI to make timely escrow disbursements. As a result, BSI did not make timely property tax or homeowner’s insurance premium payments out of escrow accounts for many consumers.

Violations of RESPA and its implementing regulations included BSI’s inability to recognize loss mitigation activity at the time of transfer, as well as BSI’s failure to oversee service providers responsible for escrow disbursements and to correct those service providers’ errors in response to consumer complaints. BSI also failed to maintain a document management system in a manner that would allow its personnel to provide accurate information to borrowers about their loans and available loss mitigation options, according to the CFPB. The consent order also detailed violations of the Consumer Financial Protection Act of 2010’s prohibition against unfair, deceptive, or abusive acts or practices, including BSI’s failures to complete mortgage loan servicing transfers in a manner that allows it to pay timely escrow disbursements. BSI’s failure to enter in its servicing system loan data concerning interest-rate adjustments on adjustable rate mortgages and to disclose interest rate changes on such loans to borrowers, and its practices in sending periodic statements to those borrowers purporting to charge interest amounts based on an unadjusted interest rate, violated RESPA along with the Truth in Lending Act, according to the Bureau.

The Bureau found that BSI handled mortgage servicing transfers with incomplete or inaccurate loss mitigation information, resulting in failures to recognize transferred mortgage loans with pending loss mitigation applications, in-process loan modifications, and permanent loan modifications. Additionally, according to the bureau, BSI handled mortgage servicing transfers with incomplete or inaccurate escrow information resulting in untimely escrow disbursements, and inadequately oversaw service providers, resulting in untimely escrow disbursements to pay borrowers’ property taxes and homeowners’ insurance premiums. The Bureau also found that BSI failed to promptly enter interest rate adjustment loan data for adjustable rate mortgage loans into its servicing system, resulting in BSI sending monthly statements to consumers that sought to collect inaccurate principal and interest payments. BSI also maintained an inadequate document management system that prevented BSI’s personnel or consumers from readily obtaining accurate information about mortgage loans, according to the Bureau.

Companies: Servis One, Inc.; BSI Financial Services

MainStory: TopStory CFPB EnforcementActions Mortgages RESPA TruthInLending UDAAP

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