Townstone Hits Back At CFPB Over Redlining Lawsuit

Lawyers for the Chicago mortgage company Townstone Financial accused the Consumer Financial Protection Bureau of targeting their client because of their political views – and not their business practices, as laid out by the agency earlier this week. Specifically, the lawyers say, “(CFPB Director Kathy) Kraninger is saying in this lawsuit that financial institutions are engaging in unlawful discrimination if they advertise too much on conservative media, or if their owners, executives, or staff express conservative political viewpoints, such as statements in support of the police. This is the next step in the left’s `cancel culture.’” On Wednesday, the CFPB filed a lawsuit against Townstone for allegedly discouraging Black applicants from applying for loans while engaging in redlining by discouraging…

CFPB Sues Chicago Lender For Redlining

The Consumer Financial Protection Bureau filed a lawsuit against a Chicago-based mortgage lender for allegedly discouraging Black applicants from applying for loans while engaging in redlining by discouraging borrowers for investing in predominantly African-American neighborhoods. The CFPB alleges Townstone “drew almost no applications for properties in African-American neighborhoods” in the Chicago metropolitan area between 2014 and 2017, while processing few applications from potential Black borrowers in the Chicago area. Specifically, the complaint – filed in federal court in the Northern District of Illinois – alleges: Townstone engaged in acts or practices, including making statements during its weekly radio shows and podcasts through which it marketed its services, that illegally discouraged prospective African-American applicants from applying to Townstone for mortgage loans;Townstone…

Supreme Court Rules CFPB Structure Unconstitutional

The Supreme Court ruled Monday that the structure of the Consumer Financial Protection Bureau is unconstitutional – but left in place the rest of the legislation creating the consumer protection agency. Writing for the majority in the 5-4 decision, Chief Justice John Roberts said the law violate the separation of powers clause because it prevented the president from firing the agency director at will. The law said the director could only be fired “for cause.” “We therefore hold that the structure of the CFPB violates the separation of powers,” the Supreme Court ruled. “We go on to hold that the CFPB Director’s removal protection is severable from the other statutory provisions bearing on the CFPB’s authority. The agency may therefore continue…

Major Home Seller Settles With CFPB – For $35,000

The Consumer Financial Protection Bureau announced Tuesday it had reached a $35,000 settlement with Harbour Portfolio Advisories and two of its subsidiary companies over allegations they had violated the Consumer Financial Protection Act. Dallas-based Harbour – along with National Asset Advisors (NAA) and National Asset Mortgage (NAM) – is one of the largest sellers of foreclosed homes. The companies were accused of telling customers they had to tell the CFPB of alleged errors on their credit reports – which the bureau called “deceptive acts and practices.” CFPB noted, “Regulation V, which implements the Fair Credit Reporting Act, required NAA or NAM to investigate written disputes and contact the consumer-reporting agency to resolve any errors.  Also, either company could investigate a…

Watchdog Gives Lenders A Pass On Complaints

After spending months trying to arrange a repayment plan with her mortgage servicing company, a South Carolina homeowner filed a complaint with the Consumer Financial Protection Bureau. The complaint was listed as closed just days after Shellpoint Mortgage Servicing provided the agency with its explanation – one that did not resolve the issue and one that is not sufficient to the homeowner. The homeowner learned that Shellpoint was her new mortgage servicer in December after receiving correspondence that she and her husband were behind on their payments. Although she said they were current as of September, Shellpoint said otherwise. The homeowner said they eventually reached an agreement to make down-payment of $6,577.71 so they could enter a repayment plan, but Shellpoint…

Debt-To-Income Nixed Under CFPB Proposal

The Consumer Financial Protection Bureau announced Monday that it is proposing replacing the debt-to-income ratio for qualified mortgages with a loan price-based approach. The bureau said it is proposing the change because “a loan’s price, as measured by comparing a loan’s annual percentage rate to the average prime offer rate for a comparable transaction, is a strong indicator and more holistic and flexible measure of a consumer’s ability to repay than debt to income alone.” The proposal is one of two issued by the CFPB to address what is known as the GSE Patch, which is schedule to expire in January 2021 or when the GSEs (Fannie Mae and Freddie Mac) exit conservatorship, whichever comes first. CFPB explains the need…

Consumer Groups Sue To Disband CFPB “Task Farce”

A group of consumer advocates sued the Consumer Financial Protection Bureau and Director Kathy Kraninger on Tuesday, alleging they created a task force that does not serve the public interest and has secretly conducted its work in violation of federal law. The plaintiffs – including the National Association of Consumer Advocates, U.S. Public Interest Research Group and consumer law Professor Kathleen Engel – allege the task force is “stacked with industry-aligned members, excludes consumer advocates, does not serve a public interest, and has conducted its work behind closed doors.” The lawsuit seeks to prevent the task force from operating. “A group of hand-picked industry lawyers and consultants that meets behind closed doors — with no consumer advocates or disparate points…

Shellpoint Again Tops Monthly CFPB Complaints

For the second straight month, Shellpoint Partners racked up the highest number of mortgage-related consumer complaints to the Consumer Financial Protection Bureau, according to publicly available data on the federal agency’s website.  In April, 159 people filed complaints against Shellpoint citing various issues; another 101 people filed complaints in May. Wells Fargo had the second most complaints in May at 82, followed by Freedom Mortgage Company (66), Ocwen Financial Corporation (66) and Nationstar Mortgage (64). Shellpoint Partners could not be reached for comment. In 2018, Shellpoint was acquired by New Residential Investment Corp. in a $190 million deal. Shellpoint is the parent company for several subsidiaries, including Shellpoint Mortgage Servicing and mortgage lender New Penn Financial. Link to database The…

“Please Help!” CFPB Flooded With Complaints

As the economic impact of the coronavirus fully took hold in April, the Consumer Financial Protection Bureau was deluged with calls from Americans looking for help as they struggled to pay their mortgages and other bills. In April, the bureau fielded 31,422 complaints about financial institutions – up from 29,538 in March and 22,915 in April 2019. Of those calls, 1,938 were concerning mortgage related-issues – the vast majority relating to struggles with paying their loans. A huge chunk of the complaints – 75 percent – were resolved with an explanation from the lender. A substantial portion of these complaints come from borrowers seeking forbearance, only to learn that their loans were not eligible. The $2 trillion CARES Act includes…

Analysis: Mortgage-Related CFPB Complaints In 2019

Bait and switch. Pleas for help with foreclosure. Accusations of a stolen mailbox. The Consumer Financial Protection Bureau receives more than 1 million complaints from banking consumers across the country each year – including issues surrounding credit cards, debt collection, everyday banking transactions and mortgages.  The Mortgage Note conducted an analysis of the 22,708 mortgage-related complaints filed with the CFPB in 2019. The review found that a vast majority of the complaints are closed with an explanation from the mortgage lender, more than half are centered on payment issues, and very few result in any sort financial restitution. The analysis found that Wells Fargo led the way with 2,065 mortgage-related complaints filed by consumers against the bank. The San Francisco-based…