The Consumer Financial Protection Bureau (CFPB) is pursuing the Biden administration’s campaign against so-called junk fees by publishing an edition of Supervisory Highlights featuring what the agency described as its actions “to combat junk fees charged by mortgage servicers, as well as other illegal practices.”
In a press statement, the CFPB alleged that its investigators “found servicers charging illegal junk fees, such as prohibited property inspection fees; sending deceptive notices to homeowners; and violating loss mitigation rules that help struggling borrowers stay in their homes. In response to the CFPB’s findings, financial institutions refunded junk fees to borrowers and stopped their illegal practices.”
Among the violations cited by the CFPB were mortgage servicers who charged homeowners late fees that exceeded amounts allowed by their mortgage loan agreements; the failure by servicers to waive late fees and penalties during the pandemic; the failure by servicers to pay taxes and insurance in a timely manner; and servicers who neglected to properly evaluate homeowners for alternative repayment options.
The CFPB also announced it was working to address “other anticompetitive mortgage fees,” including those related to closing costs.
“Homeowners cannot just simply switch providers if their mortgage servicer charges them illegal junk fees,” said CFPB Director Rohit Chopra. “Since mortgage borrowers are captive to a company they never chose to do business with, we are working hard to detect and deter violations of law.”
