Mortgage servicer BSI Financial Services will pay a penalty of $200,000 and restitution to borrowers of at least $36,500 to settle allegations from the Consumer Financial Protection Bureau (CFPB) that the company violated various rules established under the Real Estate Settlement Procedures Act and the Truth in Lending Act, including mishandling loans in distress during the mortgage servicing rights (MSR) transfer process.
The alleged violations occurred during the 2012-2014 period, according to a CFPB press release.
Specifically, the bureau says some MSR transfers were mishandled due to “incomplete or inaccurate loss mitigation information.”
“This resulted in failures to recognize transferred mortgage loans with pending loss mitigation applications, in-process loan modifications, and permanent loan modifications,” the bureau says.
In addition, BSI allegedly handled MSR transfers “with incomplete or inaccurate escrow information, resulting in untimely escrow disbursements.”
The firm also failed to adequately oversee service providers, “resulting in untimely escrow disbursements to pay borrowers’ property taxes and homeowners’ insurance premiums,” the bureau says in its release.
The bureau adds that BSI failed “to promptly enter interest rate adjustment loan data for adjustable rate mortgage (ARM) loans into its servicing system,” which, in turn, resulted in inaccurate principal and interest payments to be included in monthly billing statements.
BSI also maintained an “inadequate document management system” that prevented the company’s “personnel or consumers from readily obtaining accurate information about mortgage loans.”
In addition to the monetary penalties, BSI must also “establish and maintain a comprehensive data integrity program to ensure the accuracy, integrity and completeness of the data for loans that it services.”
Lastly, the firm must “implement an information technology plan” to ensure its “systems are appropriate” for a mortgage servicer of its size and type.
To read the complete consent order, click here.