CFPB Ends Consent Order Against Fay Servicing

The decision, made on July 1, follows Fay Servicing’s payment of $3 million in restitution to affected consumers and a $2 million civil money penalty. A spokesperson for Fay Servicing said the company “appreciates the CFPB’s action. We remain committed to the highest standards of compliance and borrower care as we continue with our mission of supporting homeowners across the country.”

“To this date, Fay Servicing has fulfilled several obligations under the consent order,” said CFPB Acting Director Russell Vought in the order.

Fay Servicing settled the case in August 2024, though company leadership maintained that it “strongly disagrees with the CFPB’s claims in this matter.”

According to the order, the company violated mortgage servicing laws, including failure to place foreclosure holds in a timely manner and inadequate disclosures regarding how borrower preferences could affect eligibility for loss mitigation options.

In addition, the company allegedly failed to cancel private mortgage insurance (PMI) on time and charged late fees exceeding what was permitted under borrowers’ mortgage contracts.

The CFPB also said Fay Servicing violated a 2017 consent order that addressed similar issues, claiming the company “continued to break the law.”

In that case, the CFPB had accused the servicer of keeping borrowers “in the dark” during the foreclosure relief application process, ordering the company to cease its unlawful practices and pay $1.15 million to impacted customers.

Under the 2024 consent order, Fay Servicing also agreed to invest at least $2 million to upgrade its technology and compliance management systems. The order imposed restrictions on Chairman and CEO Edward Fay’s compensation if he failed to ensure compliance.

The CFPB confirmed that the $3 million paid by the company will be distributed to affected consumers as part of the August 2024 settlement.

The Bureau also terminated on July 1 a case against Virginia-based Navy Federal Credit Union, a company that in November 2024 agreed to pay more than $95 Million for illegal surprise overdraft fees.