The Consumer Financial Protection Bureau has concluded a 2024 action it took against nonbank mortgage company Fay Servicing under a former director in line with a broader rollback of enforcement under new leadership.
“The bureau waives any alleged noncompliance by Fay Servicing with the consent order,” read an order that Russell Vought, the CFPB’s current acting director, authorized. The new order leave consumer redress and a monetary penalty involved in place
The move releases Fay from an order it felt forced into a “business decision” to sign off on despite disagreement with claims of new violations and issues related to compliance with a prior 2017 settlement involving dual tracking claims.
CFPB also had previously terminated the 2017 order, which a company spokesperson had said that year involved “isolated” and “technical” claims that “concern a small fraction” of Fay’s borrowers. Richard Cordray headed the bureau back then.
(Dual tracking prohibitions governed by the Real Estate Settlement Procedures Act’s Regulation X and other consumer protection laws are designed to prohibit situations where companies simultaneously pursue a foreclosure path while evaluating borrowers for alternatives.)
Fay issued statements on Wednesday showing appreciation for the CFPB’s termination of the 2024 consent order and noting that the company is “committed to the highest standards of compliance and borrower care.”
A company spokesperson added that its legal representative, Michelle Rogers of Cooley LLP, confirmed that the CFPB dismissed the 2024 consent order.
Fay agreed to pay a $2 million civil money penalty and $3 billion consumer redress as part of the 2024 consent order. It also agreed to spend $2 million on compliance management and technology last year, an expenditure there was no mention of in the termination order.
Vought said in his order that Fay had satisfied the first two obligations and that the bureau would be distributing the redress to consumers.
Other CFPB actions walked back at mortgage lenders and banks
The CPFB has dismissed several previous actions against companies in the housing finance industry and other business sectors, including lawsuits against Rocket and Vanderbilt Mortgage, and a $95 million overdraft settlement with Navy Federal.
The bureau also withdrew an amicus brief supporting plaintiffs suing Mr. Cooper for charging $25 for expedited payoff quotes, and has signaled that it could take larger deregulatory actions such as axing the loan officer compensation rule.
The tax bill the Senate recently passed, which is going through a budget reconciliation process with the House, would gut the CFPB’s funding in line with longtime Trump administration aims.
States remain active in nonbank mortgage servicer oversight
While the Trump administration has largely defanged the bureau, there are widespread expectations certain state regulators like California’s Department of Financial Protection or the New York Department of Financial Services could look to fill in the gap.
Although only 11 states have completely adopted the Conference of State Bank Supervisors’ prudential standards for nonbank mortgage servicers. CSBS considers 99% of the market covered by them due to multistate examinations, according to Kevin Byers, a senior director.
Arkansas, Colorado, Connecticut, Georgia, Iowa, Maryland, Minnesota, Montana, Nevada, North Dakota and Wisconsin have signed on in whole and North Carolina may follow. There’s partial adoption in Oregon and Washington. New York’s standards are considered similar.
