• On Thursday, September 25, 2014, the OCC and the CFPB required U.S. Bank to pay $57 million in fines and restitution for charging 420,000 of its customers for identity theft and credit monitoring services that were never provided by Affinion, a former service provider.
• On Monday, September 29, 2014, the CFPB ordered service provider Flagstar Bank to pay $37.5 Million in fines and restitution for its foreclosure activities from 2011 to date that do not comply with the new Mortgage Servicing Rules (Rules) that became effective in January of 2014. Further, the CFPB has ordered Flagstar not to board or service any new loans until it has demonstrated compliance with the Rules.
• On Tuesday, September 30, 2014, the CFPB issued a consent order against Lighthouse Title, Inc., a Michigan title company, for violating Section 8 of RESPA when it executed various Marketing Service Agreements (“MSAs”) with downstream service providers. The CFPB found fault with Lighthouse’s MSAs because the marketing fees therein were not determined by the fair market value of the ads placed or by any calculation of such ads’ values, but instead by the number of referrals the title company received and the price that Lighthouse’s competitors were willing to pay for its services. Further, the CFPB found that Lighthouse did not diligently monitor its counter parties to ensure that it actually received the marketing services for which it contracted under the MSAs. As part of the Consent Order, Lighthouse agreed to pay $200,000 in civil penalties to the CFPB.
To help clients comply with the CFPB’s new vendor/service provider requirements, Janna Lewis offers assistance with the selection and negotiation of key vendor relationships (custodian, trustee, outside counsel, servicer); vendor contract reviews; pre-acquisition vendor management; assistance with the development and implementation of vendor management programs; initial and ongoing assessments for vendor compliance.