Tuesday, April 28, 2015

Regions Bank fined $7.5 mil for illegal overdraft practices (re-post of press release from CFPB)

FOR IMMEDIATE RELEASE: April 28, 2015 [CBPB announcement via Internet] 


Bank Refunds $49 Million in Illegal Fees to Consumers Who Did Not Opt-In to Overdraft

Regions Branch in Houston (Galleria)
WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) took action against Regions Bank for charging overdraft fees to consumers who had not opted-in for overdraft coverage. The bank also charged overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not. Regions has already refunded hundreds of thousands of consumers approximately $49 million in fees, and the consent order requires the bank to fully refund all remaining consumers. The Bureau also fined the company $7.5 million for its illegal actions. “Today the CFPB is taking its first enforcement action under the rules that protect consumers against illegal overdraft fees by their banks,” said CFPB Director Richard Cordray. “Regions Bank failed to ask consumers if they wanted overdraft service before charging them fees. In the end, hundreds of thousands of consumers paid at least $49 million in illegal charges. We take the issue of overdraft fees very seriously and will be vigilant about making sure that consumers receive the protections they deserve.” 
Regions Bank, headquartered in Birmingham, Alabama, operates approximately 1,700 retail branches and 2,000 ATMs across 16 states. It is one of the country’s biggest banks with more than $119 billion in assets. Among its various products and services, it has checking accounts and offers loans known as deposit advance products. With deposit advance products, the borrower authorizes the bank to claim repayment as soon as the next qualifying electronic deposit is received. 
Regions offers overdraft services with its checking accounts. An overdraft can occur when consumers spend or withdraw more money from their checking accounts than is available. The financial institution can choose to cover the payment by advancing funds on the consumer’s behalf, and generally charges a fixed overdraft fee for doing so. The institution can also choose to return the payment if it is a check, online bill payment, or direct debit, and then charge a non-sufficient funds fee. In recent years, most banks have adopted automated systems for making these decisions. These systems have contributed to the evolution of overdraft from an occasional courtesy to a significant source of industry revenues. 
In 2010, federal rules took effect that prohibited banks and credit unions from charging overdraft fees on ATM and one-time debit card transactions unless consumers affirmatively opted in. If consumers don’t opt-in, banks may decline the transaction, but won’t charge a fee. The “opt-in” rule took effect in July 2010 for new accounts and August 2010 for existing accounts.  
The Bureau found that Regions Bank: 
  • Failed to obtain required opt-ins for certain consumers: Regions allowed consumers to link their checking accounts to savings accounts or lines of credit. Once that link was established, funds from the linked account would automatically be transferred to cover a shortage in a consumer’s checking account. Regions never provided customers with linked accounts an opportunity to opt in for overdraft. Because those consumers had not opted in, Regions could have simply declined ATM or one-time debit card transactions that exceeded the available balance in both the checking and linked accounts. Instead, the bank paid those transactions then charged its customers a fee of up to $36. Those fees violated the opt-in rule. 
  • Delayed fixing the violation until almost a year after discovering it: Thirteen months after the opt-in rule’s mandatory compliance date, an internal review by the bank found that linked-account overdraft fees violated the rule. But Regions failed to stop the charges for almost another year. It was not until April 2012 that the compliance department brought the violation to the attention of senior executives, who then reported the error to the Bureau. Regions reprogramed its systems to stop charging the unauthorized fees in June 2012. In early 2015, the bank discovered additional accounts that had been charged unauthorized fees. 
  • Misrepresented overdraft and non-sufficient funds fees related to its deposit advance product: Regions charged overdraft and non-sufficient fundsfees with its deposit advance product, called Regions Ready Advance, despite claiming it would not. Specifically, if the bank collected payment from the consumer’s checking account and the payment was higher than the amount available in the account, it would cause the consumer’s balance to drop below zero. When that happened, the bank would either cover the transaction and charge an overdraft fee or reject its own transaction and charge a non-sufficient funds fee. At various times from November 2011 until August 2013, the bank charged non-sufficient funds fees and overdraft charges of about $1.9 million to more than 36,000 customers. 

Enforcement Action
Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions violating federal consumer financial laws, including by engaging in unfair, deceptive, or abusive acts or practices. Regions Bank violated the Electronic Fund Transfer Act and the Consumer Financial Protection Act of 2010. The CFPB’s order requires that Regions Bank: 

  • Provide refunds to all remaining affected consumers: Regions Bank voluntarily reimbursed approximately 200,000 consumers a total of nearly $35 million in December 2012 for the illegal overdraft fees. After the Bureau alerted the bank to more affected consumers, Regions returned an additional $12.8 million in December 2013. In January 2015, the bank identified even more affected consumers and is now required to provide them with a full refund. Under the terms of the consent order filed today, Regions must hire an independent consultant to identify all remaining consumers who were charged the illegal fees. Regions will return these fees to consumers, if not already refunded. If the consumers have a current account with the bank, they will receive a credit to their account. For closed or inactive accounts, Regions will send a check to the affected consumers. 
  • Correct errors on credit reports: Regions must identify and fix all instances of negative credit reporting resulting from the unlawful fees. 
  • Pay a $7.5 million fine: Regions will make a $7.5 million penalty payment to the CFPB’s Civil Penalty Fund. Regions’ violations and its delay in escalating them to senior executives and correcting the errors could have justified a larger penalty, but the Bureau credited Regions for making reimbursements to consumers and promptly self-reporting these issues to the Bureau once they were brought to the attention of senior management. 
The CFPB’s July 2014 Overdraft Data Point is available at:http://files.consumerfinance.gov/f/201407_cfpb_report_data-point_overdrafts.pdf 
The CFPB’s Responsible Conduct Bulletin is available at:http://files.consumerfinance.gov/f/201306_cfpb_bulletin_responsible-conduct.pdf 


Prepared Remarks of Cara Petersen Deputy Enforcement Director of the Consumer Financial Protection Bureau 

Regions Bank Enforcement Action Press Call 

Washington, D.C. April 28, 2015

Today the Consumer Financial Protection Bureau is taking its first enforcement action under the federal rules that protect consumers against illegal overdraft fees by their banks.  We are taking action against Alabama-based Regions Bank for failing to ask consumers if they wanted overdraft service before charging them fees for this service.  Regions amplified this harm by letting it drag on for almost an additional year after the bank first discovered the violation.  The bank also charged overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not do so.  In the end, hundreds of thousands of consumers paid at least $49 million in illegal charges. 
The 2010 Federal Reserve overdraft “opt-in” rule is critically important.  It prohibits depository institutions from charging an overdraft fee for ATM withdrawals and one-time debit card transactions unless the consumer has affirmatively “opted in.”  The opt-in permission means that if consumers overspend their balance while using their debit card to make a purchase or withdraw cash from an ATM, the bank will cover the shortage with a temporary advance, in exchange for a fee.  If consumers do not opt in, transactions are generally declined, with no fee. 
When the rule was first implemented, Regions Bank did not apply it to situations when consumers had one Regions account linked to a second Regions account, such as a savings account or a line of credit.  If a consumer exhausted their funds in their checking account, the bank would automatically dip into the second account or line of credit.  But in circumstances where the combined balance in both the checking account and linked account was not enough to cover the transaction, Regions would sometimes pay the transaction through its overdraft service and charge an overdraft fee of up to $36.  Yet Regions failed to obtain consumer consent from many of these customers for this overdraft service.  This failure to get the required consumer permissions resulted in customers paying tens of millions of dollars in illegal overdraft fees. 
To compound the problem, Regions Bank identified the violation but failed to channel that information to senior decision makers.  The result was that the bank continued to charge consumers incorrectly for almost a year after it discovered the problem. 
Regions also had a deposit advance product, called Regions Ready Advance, which led to a second violation.  Deposit advance products are like payday loans; they typically are sold as a way to bridge a cash-flow shortage between paychecks or other income.  Generally these loans are for small-dollar amounts and borrowers must repay them quickly by giving lenders access to their deposit accounts. 
Regions said it would not charge overdraft or non-sufficient funds fees when its customers made repayments on its Ready Advance loans.  But the bank did, in fact, assess such fees in instances where it collected payment from the consumer’s checking account and caused the balance to drop below zero.  Charging such fees in addition to collecting its payments was contrary to its description of how these loans worked.  At various times from November 2011 until August 2013, the company charged non-sufficient funds fees and overdraft charges of nearly $2 million to tens of thousands of its deposit advance customers. 
Regions has already refunded $49 million to consumers.  Today’s order requires Regions Bank to ensure that all remaining customers get their money back if they were wrongfully charged fees.  The bank also must pay a fine of $7.5 million for the violations.  And, it is worth noting, Regions’ conduct would have warranted an even stiffer penalty if it had not voluntarily refunded consumers and promptly self-reported this problem to the Bureau once it was brought to the attention of senior management.  Any consumers who had their credit harmed as a result of the violations will also get their credit records straightened out. 
At the Consumer Bureau, we take the issue of overdraft fees very seriously.  In its original form, overdraft began as an occasional courtesy service for checks that would otherwise have been returned, but it has evolved over the years.  By the time the opt-in rule was adopted in 2010, if a consumer overdrew his account, banks and credit unions often would cover the difference and generally charge a fee for that service.  With the advent of debit cards, consumers started to use them instead of cash for more of their small or impulse purchases.  And as banks and credit unions came to cover more of these transactions, they started assessing higher fees for doing so.  Accordingly, overdraft started to become a significant source of the revenue generated from checking accounts.  Today, even with the opt-in rule in place, more than half of consumer checking account income comes from overdraft and similar fees. 
Opting consumers into overdraft without their permission can be very expensive.  In July 2014, the CFPB released its second report on overdraft that raised concerns about how consumers are being affected by overdraft practices.  It confirmed that overdraft fees can pile up quickly on smaller debit card purchases, often for less than $24, such as buying a quick meal or perhaps an impulse purchase at the mall.  The study also found that, on average, opted-in accounts pay almost $260 per year in overdraft and non-sufficient funds fees, compared to just over $35 for non-opted-in accounts. 
The 2010 opt-in rule made clear that consumer protection in this area is critical.  That Regions Bank violated the law raises definite concerns worthy of note by all depository institutions.  And their customers should rest assured that the Consumer Bureau is here to protect them when it comes to the hard-earned money they keep in their checking accounts.  Thank you. 

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

Monday, April 27, 2015

CFPB Leader on Financial Abuse of the Elderly (press release re-post)

FOR IMMEDIATE RELEASE: April 27, 2015 [issued by the CFPB via the internet] 

Prepared Remarks of Richard Cordray Director of the Consumer Financial Protection Bureau 

White House Conference on Aging Regional Forum 

Cleveland, Ohio 

April 27, 2015
Good morning.  It is an honor to be here today alongside my colleagues who are stalwart champions of our seniors.  We are here because we care about making sure that all Americans, throughout their lifespans, can have the opportunity to learn and develop skills, engage in productive work, make sound choices about their daily lives, and participate fully in the life of our communities. 
We are experiencing the greying of America, with 45 million people in this country who are age 65 or older and 10,000 more who are turning 65 each day.  They are our grandparents, our parents, our neighbors, our friends.  And they are living longer, healthier lives than ever before.  The average American is now spending about twenty years in retirement.  During these years, they are active consumers.  They are still taking out and making payments on mortgages; they are still borrowing to buy cars and trucks; they are still accumulating credit card debt; some are even taking out student loans on behalf of their grandchildren.  These heavier debt loads, that previous generations did not have, can threaten their economic security. 
We have recently come through the worst financial crisis since the Great Depression.  Many Americans were shaken in their deeply held belief that if they work hard and act responsibly, they can get ahead and retire securely.  Millions lost their jobs, millions lost their homes, and almost all of us lost a substantial chunk of our life savings. 
In the aftermath of the crisis, this country had to make a new beginning.  The new Consumer Financial Protection Bureau is part of that fresh start.  We are very busy addressing key problems in the consumer financial markets, and we are working to create a sustainable marketplace where informed consumers can find value in responsible business practices.  Let me briefly describe three ways we are seeking to accomplish these goals. 
First, we are cleaning up problems in the financial marketplace through evenhanded oversight and enforcement of the law.  So far our enforcement actions have made over $5.3 billion available to millions of consumers, and we have levied hundreds of millions of dollars in penalties.  We also are improving the financial markets through balanced regulation.  For example, in the largest single consumer financial market in the world – the U.S. mortgage market, worth trillions of dollars – we have adopted sweeping new rules to ensure that the excesses and irresponsible practices that brought about the financial crisis cannot be repeated.  That change alone will help safeguard Americans against the kinds of economic dangers and calamities they suffered just a few short years ago. 
Second, we are addressing individual problems that arise every day through our consumer response function.  To date, we have addressed complaints from over 600,000 consumers.  More than 50,000 of them came from consumers who told us they are age 62 or older.  Through our complaint process, we have helped return millions of dollars to consumers and we have solved other problems that had been frustrating them for months or even years.  Anyone who believes they were mistreated on their mortgage, auto loan, student loan, credit card, or bank account can go to our website at consumerfinance.gov to file a complaint.  It is a simple and easy process and typically takes less than fifteen minutes from start to finish. 
Third, we are developing powerful new tools for all consumers, including older Americans.  For those who feel disempowered by the confusing explanations provided for many financial products, we have created our “Ask CFPB” tool.  This interactive database has over a thousand answers to questions most commonly asked by consumers.  When you encounter a particular issue, you can go to Ask CFPB to learn more about it and understand your rights. 
So in these ways the Consumer Bureau is working on behalf of more than 300 million American consumers.  But the law that created our new agency specifically recognized the need to protect older Americans against financial exploitation and promote economic security later in life.  With the aging of the baby boomer generation, that mission has never been more important.  This is especially so for two central themes of the White House Conference on Aging:  retirement security and elder justice.  Our Office for Older Americans is dedicated to addressing these issues.  It has enjoyed top-flight leadership, first from Hubert Humphrey III and now from Nora Dowd Eisenhower – two individuals who became leaders on these issues at the state level before bringing that same commitment to the federal level at the new Consumer Bureau.  Let me describe how we are making progress in both of these areas. 
Our Office for Older Americans has done much great work around retirement security.  Our team has traveled the country listening to older Americans.  Based on what we heard, we issued studies, guides, and advisories to arm seniors and their caregivers with the information and tools they need to protect themselves and their precious retirement savings. 
One of our first reports to Congress exposed problems with so-called “senior designation” credentials that many financial advisers use to market their services to older Americans.  We identified more than fifty different senior designations that financial advisers use to indicate that they have advanced training or expertise in the financial needs of older consumers.  Many of these credentials are flimsy at best, yet they can confuse older consumers, who are already at risk for deception and fraud.  Based on those findings, we made recommendations to policy makers to help older consumers by implementing rigorous training standards and increasing supervision and enforcement. 
In another report, we found that debt collection is a top complaint for older Americans, just as it is for younger consumers.  So we issued a consumer advisory to help older Americans deal with harassing debt collectors.  We let them know that their federal benefits are legally protected against these risks, and we explained how they can dispute debts they believe are false or inaccurate. 
We have also done much work on reverse mortgages, starting with a comprehensive report on the industry that we published three years ago.  We have produced a guide to help consumers assess the pros and cons of this product, and for those who already have a reverse mortgage, we have offered tips on how to plan ahead to avoid financial hardships that may result from certain mortgage terms.  We have also analyzed our consumer complaints on reverse mortgages, which showed that many older consumers are quite frustrated with loan terms, servicing runarounds, and foreclosure problems.  We are helping many seniors who filed these complaints, and we are prioritizing these issues for oversight and enforcement. 
Protecting older consumers also means supporting those who love and take care of them.  So we put out a guide to help assisted living and nursing home staff better protect the people in their care by preventing and addressing financial abuse and scams.  Many seniors are vulnerable, and our guide helps their caretakers deal with financial mistreatment by family members or others who are handling the finances of an incapacitated adult. 
About 22 million people who are age 60 or older have named someone as an agent under a power of attorney to make financial decisions for them – and millions more have court-appointed guardians or other fiduciaries.  The vast majority of those designated to serve in these capacities are trying their best to do the right thing, but they often have no training.  We have published guides, called “Managing Someone Else’s Money,” to help family members and friends better understand their role in serving as financial caregivers.  These guides are written in plain language and are designed to apply to four different types of fiduciaries.  Each guide tells them about their duties, how to prevent and respond to financial exploitation and scams, and where to go for additional help. 
In partnership with the FDIC, we have also developed resources that provide financial education for older consumers and their caregivers.  “Money Smart for Older Adults” uses a train-the-trainer approach that makes it easy for instructors to provide practical guidance for a safe and secure financial future.  Instructors can include financial institution staff, senior organizations, adult protective services agencies, law enforcement, and others who serve this population. 
In addition to retirement security, the Consumer Bureau also is focused on issues of elder justice.  Unfortunately, we have seen that older Americans all too often fall prey to financial exploitation.  They make attractive targets because they often have higher household wealth in the form of retirement savings or home equity or both.  They may develop impaired capacity and they can be isolated and vulnerable.  Recent studies found that financial exploitation is the most common form of elder abuse, but that only a small fraction of incidents is ever reported.  I saw this during my time as the Attorney General of Ohio – how a lifetime of savings can be wiped out by falling prey to a scam artist.  Our Office for Older Americans is working with a broad spectrum of stakeholders to prevent these things from happening. 
We are also bringing enforcement actions to address some of the issues most commonly raised by older American consumers.  Two of those issues are mortgage servicing and debt collection.  We have taken major actions against Ocwen and Flagstar, two large mortgage servicers, for the same troubles seniors are experiencing.  And we have brought numerous enforcement actions for problems in debt collection that are frequently described by older consumers.  We have also begun to police reverse mortgage lenders for advertisements that misstate the costs and risks of these sensitive financial products – advertisements we so often see on late-night television. 
We are also calling on financial institutions to do their part to help protect older Americans.  When seniors fall victim to a scam or to theft by a trusted family member, they may be too embarrassed or too frail to pursue legal action or even to report that they have suffered harm.  So it is crucial that other folks are looking out for them too.  Financial institutions are especially well-positioned to prevent such fraud.  Many older consumers make frequent use of traditional bank and credit union branches and are known personally by the tellers, who often are able to spot irregular transactions, abnormal account activity, or unusual behavior that signals financial abuse. 
Preventing elder financial abuse requires coordinated efforts on the national, state, and community level.  Financial institutions can and should collaborate with Adult Protective Services, other senior service providers, and law enforcement to keep our seniors safe.  Reporting suspected abuse to the appropriate authorities is the right thing to do.  Yet there has been confusion about whether federal law permits financial institutions to do this without first informing the consumer and providing an opportunity to opt out.  The Consumer Bureau, in collaboration with other financial regulators, has developed guidance to clarify the issue and reassure financial institutions as a general matter that they can and should report suspected financial abuse that victimizes older Americans to all appropriate authorities. 
We need to recognize that we all bear responsibility here.  Both older Americans and those who look out for them should know how to identify and report the common signs of elder financial abuse.  Our “Managing Someone Else’s Money” guides highlight common signs of financial exploitation:  funds disappearing from accounts, bills that go unpaid, belongings that are missing.  It also points out others that are more subtle:  electronic or ATM withdrawals that fly under the radar or a new best friend or acquaintance showing up with power of attorney or being added as a joint account holder. 
The Consumer Bureau is encouraging all financial services providers to work with us to focus on the “three Rs”:  recognize, record, and report.  Those who serve seniors as profitable customers can also share resources effectively to prevent and respond to elder financial abuse.  Some credit unions and smaller banks are already following our guidance and sharing our resources to protect seniors.  We strongly encourage more institutions to do the same.  
The Consumer Bureau was born out of the recent financial crisis, and our work is still in its early stages.  But as the American economy recovers, we want consumers of all ages to be able to look ahead with hope and resilience.  We want them to know they have a new agency standing on their side and looking out for their interests, to help restore confidence and trust in the consumer financial marketplace.  With your help and advice, we are glad to work with you to do that.  Thank you. 

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

Tuesday, April 21, 2015

Green Tree Servicing to pay $48 million in restitution and $15 mil penalty stemming from misconduct in loan servicing [re-post of press release from the CFPB and FTC]



Green Tree to Pay $48 Million in Borrower Restitution and $15 Million Fine for Servicing Failures

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) took action against Green Tree Servicing, LLC, for mistreating mortgage borrowers who were trying to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers. Green Tree has agreed to pay $48 million in restitution to victims, and a $15 million civil money penalty for its illegal actions. 
Image of Green Tree
Different kind of Green Tree 
“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” said CFPB Director Richard Cordray. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”
Green Tree, headquartered in St. Paul, Minn., is a national mortgage servicing company. It has rapidly expanded into the residential mortgage market and services loans for millions of homeowners. Green Tree specializes in servicing delinquent loans and markets itself as a “high touch” servicer that makes frequent collection calls to consumers. 
As a servicer, Green Tree is responsible for, among other things, creating and sending monthly statements to borrowers, collecting payments, and processing payments. For troubled borrowers, it administers short sale and foreclosure relief programs provided by the owner of the loan. These “loss mitigation” programs provide alternatives to foreclosure. Green Tree is responsible for soliciting borrowers for these programs, collecting their applications, determining eligibility, and implementing the loss mitigation program for qualified borrowers. 
The CFPB and FTC allege that Green Tree engaged in illegal practices when servicing loans that it acquired from other servicers. According to the complaint filed by the CFPB and FTC, on a number of occasions, Green Tree failed to honor loan modifications that consumers had entered into with their prior servicers and insisted that the consumer pay their original, higher monthly payment. Green Tree also failed at times to get the information and documentation from the prior servicer that it needed to accurately collect payments from consumers. Green Tree demanded payments before providing loss mitigation options, delayed decisions on short sales, and resorted to illegal practices to collect mortgage payments from consumers who fell behind on their loans, including false threats, repeated calls, and revealing debts to third parties, like employers. 
Green Tree’s failures as a mortgage servicer hurt homeowners. In many cases, Green Tree delayed or deprived borrowers of the opportunity to save or sell their home. Specifically, the Bureau and the FTC allege that from 2010 to 2014, the company: 
  • Demanded payments before providing loss mitigation options: Delinquent consumers who called Green Tree were automatically routed to a debt collector. The CFPB and FTC allege that consumers who wanted to speak with a customer service representative or loss mitigation specialist rather than a collector found that there was no way to do so and were sometimes told that they had to make a loan payment before they could be considered for a loan modification. In reality, consumers did not need to make payments on their loans before they could be considered for a loan modification. For example, the Home Affordable Modification Program (“HAMP”), which Green Tree participated in, does not allow participating servicers to require consumers to make payments before considering them for a loan modification. 
  • Failed to honor in-process modifications: Because Green Tree was rapidly expanding its mortgage servicing business, it often acquired customers who already had an agreement with their previous servicer to modify their loans. The complaint alleges that Green Tree, in many instances, failed to honor these agreements and insisted that consumers pay their old higher mortgage payment. 
  • Delayed short sales: Green Tree’s short sale department was frequently unreachable and unresponsive. The complaint alleges that in numerous instances, Green Tree took two to six months to respond to consumer requests for short sales. This could have cost consumers potential buyers, and it may also have cost them other loss mitigation alternatives while their short sale requests were pending. 
  • Harassed and threatened overdue borrowers: The CFPB and FTC allege that if a consumer was two weeks or more past due, Green Tree consumers could receive seven to 20 phone calls a day. Some Green Tree representatives also told consumers that nonpayment of their mortgage loan could result in arrest or imprisonment. Or, representatives threatened seizure or garnishment of the consumer’s wages when Green Tree had no intention to take such actions. Such threats are illegal. 
  • Used deceptive tactics to charge consumers convenience fees: The Bureau and the FTC allege that Green Tree deceived consumers to get them to pay $12 for its pay-by-phone service, called Speedpay. Green Tree representatives would pressure consumers to use the service by telling consumers that Speedpay was the only available payment method to ensure the payment would be received on time. In fact, Green Tree accepted other payment methods that do not involve a fee, such as checks and ACH payments, which consumers could have used to make a timely payment. 
This enforcement action covers Green Tree’s illegal practices prior to the January 2014 effective date of the CFPB’s new mortgage servicing rules. 
Enforcement ActionUnder 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 CFPB also has authority to take action against institutions violating the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, and the Fair Debt Collections Practices Act. If entered by the court, today’s order would require Green Tree to: 
  • Pay $48 million in redress to victims: Green Tree must pay $48 million to thousands of consumers whose loan modifications were not honored, who had their short sales decisions delayed because of Green Tree’s poor servicing, or who were deceptively charged convenience fees when paying their mortgage. Borrowers who receive payments will not be prevented from taking individual action on their claims as a result of this settlement. 
  • Engage in efforts to help affected borrowers preserve their home: For certain borrowers affected by Green Tree’s unlawful practices who were not foreclosed on, Green Tree must convert in-process loan modifications into permanent modifications and engage in outreach, including telephone and mail campaigns and translation services, to contact borrowers and offer them loss mitigation options. And Green Tree must halt the foreclosure process, if one is happening, during this outreach and qualification process for these borrowers. 
  • End all mortgage servicing violations: In addition to being subject to the loss mitigation provisions of the CFPB’s new mortgage servicing rules, Green Tree is prohibited from making misrepresentations to consumers regarding loss mitigation, such as false statements about how much consumers owe Green Tree. Green Tree must take other actions relating to servicing loans in loss mitigation, such as acknowledging the receipt of a short sale request and providing consumers with a list of any missing documents, within five days. 
  • Adhere to rigorous servicing transfer requirements: Green Tree must create a detailed data integrity program that tests, identifies, and corrects errors in loans transferred to Green Tree to ensure that Green Tree has accurate information about consumers’ loans. Green Tree may not transfer loans in loss mitigation, in or out, unless all account-level documents and data relating to loss mitigation are provided to the new servicer by the date of transfer. 
  • Honor prior loss mitigation agreements: Green Tree must honor loss mitigation agreements entered by the prior servicer, continue processing pending loss mitigation requests received in the transfer, and review and evaluate pending loss mitigation applications within a set time. 
  • Provide access to quality customer service: Green Tree must ensure that consumers are referred to a loss mitigation or other appropriate supervisor upon request, have access to individuals able to stop foreclosure proceedings, and are not subject to compensation arrangements that encourage collection over loss mitigation. 
  • Pay $15 million civil penalty: Green Tree will make a $15 million penalty payment to the CFPB’s Civil Penalty Fund. 
The Bureau’s complaints and consent orders are not findings or rulings that the defendants have actually violated the law. 
A copy of the proposed consent order is available at:http://files.consumerfinance.gov/f/201504_cfpb_proposed-consent-order-green-tree.pdf 
Today’s settlement is a collaborative effort with the FTC. The FTC’s press release is available at: https://www.ftc.gov/news-events/press-releases/2015/04/national-mortgage-servicing-company-will-pay-63-million-settle