CFPB Takes Action Against Fay Servicing for Order Violation
On August 21, 2024, the Consumer Financial Protection Bureau (CFPB) ordered Fay Servicing to pay a $2 million penalty for violations of mortgage servicing laws, as well as for violations of a 2017 agency order that addressed its illegal foreclosure practices. The company failed to implement the order’s requirements and continued to break the law.
Fay Servicing took prohibited foreclosure actions against borrowers requesting mortgage assistance without offering borrowers mortgage assistance options and overcharged for private mortgage insurance.
In addition to the civil money penalty, the CFPB’s order requires Fay Servicing to pay consumer redress of $3 million and to invest $2 million to update its servicing technology and compliance management systems. The order also puts compensation limits on Edward Fay, the company’s Chairman of the Board and Chief Executive Officer (CEO), if Mr. Fay does not comply with the order.
“Fay Servicing ignored a law enforcement order by taking steps to foreclose on homeowners who are shielded by housing protection laws,” said CFPB Director Rohit Chopra. “The CFPB’s order will put the CEO’s pay at risk if Fay continues to break the law.”
Fay Servicing is a nonbank mortgage servicer. It is a Delaware limited liability corporation with its principal place of business in Tampa, Florida. Fay Servicing services mortgage loans for borrowers across the country. Mortgage servicers are responsible for administering foreclosure relief programs to help struggling borrowers including homeowners and investors avoid the costs of foreclosure.
In 2017, the CFPB took action against Fay Servicing for failing to provide for mortgage borrowers and ordered Fay Servicing to stop its illegal practices and to pay $1.15 million to harmed borrowers. In recent action, the CFPB found that Fay Servicing violated the 2017 order, the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Homeowners Protection Act, and the Consumer Financial Protection Act.