CFPB Takes Action to Stop Illegal Junk Fees in Mortgage Servicing (2024)

Home CFPB Takes Action to Stop Illegal Junk Fees in Mortgage Servicing


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The Consumer Financial Protection Bureau (CFPB)published an edition of Supervisory Highlights describing the agency’s actions to combat junk fees charged by mortgage servicers, as well as other illegal practices. CFPB examinations found servicers charging illegal junk fees, such as prohibited property inspection fees; sending deceptive notices to homeowners; and violating loss mitigation rules that help struggling borrowers stay in their homes. In response to the CFPB's findings, financial institutions refunded junk fees to borrowers and stopped their illegal practices.

The mortgage servicing examination work announced today builds on prior CFPB exam work combatting junk fees in the mortgage servicing and other consumer financial markets. In October of last year, the CFPB announced that its examination work from February to August of 2023 resulted in $140 million refunded to consumers for unlawful junk fees in the areas of bank account deposits, auto loan servicing, and international money transfers. Since that time, the CFPB’s supervision junk fee work has resulted in more than $120 million in additional junk fee refunds in the area of bank account deposits.

“Homeowners cannot just simply switch providers if their mortgage servicer charges them illegal junk fees," said CFPB Director Rohit Chopra. "Since mortgage borrowers are captive to a company they never chose to do business with, we are working hard to detect and deter violations of law.”

Mortgage servicers are the companies responsible for, among other things, processing mortgage payments and managing mortgage accounts. They play a critical role in assisting homeowners with repayment, including by helping mortgage borrowers access repayment options when they face financial difficulties. A mortgage servicer is chosen by the lender or investor that owns the mortgage, and not by the homeowner. Residential mortgage servicers currently handle more than $13 trillion in mortgage balances.

Over the last few years, the CFPB has prioritized combatting illegal junk fees in a wide range of consumer financial markets. Most recently, the CFPB announced a final rulethat, when it goes into effect, would reduce credit card late fees by more than $10 billion every year. The CFPB has also proposed a rule that would save consumers more than $3.5 billion in overdraft fees every year, and has addressed junk fees charged on international money transfers. Overdraft and non-sufficient funds fees have declined by more than $6.1 billion since the CFPB began scrutinizing junk fees.

The CFPB has also announced that it is working to address other anticompetitive mortgage fees, including those charged in connection with closing costs.

Some key findings from today’s edition of Supervisory Highlights include mortgage servicers:

  • Illegally charging and obscuring fees: Mortgage servicers charged homeowners prohibited and unauthorized fees. These included prohibited fees for property inspections and late fees that exceeded amounts allowed by their mortgage loan agreements. Mortgage servicers also failed to explain the reasons for fees by not describing them adequately on statements.
  • Keeping homeowners on the hook for fees during COVID-19: During COVID-19, many servicers used a streamlined process to determine repayment options for struggling homeowners. Some servicers failed to waive late fees and penalties, as required.
  • Missing deadlines to pay property tax and home insurance: Mortgage servicers that accepted or required money from borrowers to pay taxes and insurance failed to make those payments in a timely manner, which caused some borrowers to incur penalties. Servicers only took responsibility for those penalties for missed on-time payments if homeowners submitted complaints.
  • Deceiving homeowners and failing to properly evaluate them for repayment options: Some servicers sent notices to homeowners in financial distress that stated they had been approved for a repayment option. In fact, no final decisions had been made, and some of the homeowners were ultimately rejected. Examiners also found servicers sent some homeowners false notices saying that they had missed payments and should apply for repayment options. Servicers also improperly denied requests for help and failed to evaluate struggling borrowers for repayment options as required under the CFPB’s mortgage servicing rules.

In response to the CFPB’s findings, mortgage servicers are taking corrective actions, including changes to their policies and procedures. For the fee-related findings, servicers are remediating homeowners, including providing refunds.

The CFPB has been looking at ways to streamline mortgage servicing rules, while making sure mortgage servicers fulfill their obligations to treat homeowners fairly. Findings from this edition of Supervisory Highlights will help inform any proposed changes.

Read this edition of Supervisory Highlights.

Read consumer complaints about mortgage servicers.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who they believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to


The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit

Tags: CFPB, Homeowners, Mortgage, Junk Fees

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CFPB Takes Action to Stop Illegal Junk Fees in Mortgage Servicing (2024)


How do mortgage servicers respond to CFPB junk fee concerns? ›

In response to the CFPB's findings, mortgage servicers are taking corrective actions, including changes to their policies and procedures. For the fee-related findings, servicers are remediating homeowners, including providing refunds.

What are the positive effects of the CFPB on the mortgage industry? ›

Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB has created stronger consumer financial markets, increased transparency in the marketplace, and has established necessary safeguards against predatory lending practices.

How much does CFPB charge for repossession fees? ›

Inflated estimated repossession fees: Servicers, before returning vehicles to some consumers, charged inflated estimated repossession fees of $1,000. The average cost to repossess a vehicle is $350.

Does CFPB cost money? ›

Use of the CFPB Ombudsman's Office is entirely voluntary and free of charge.

What actions can the CFPB take? ›

The Bureau may enforce the law by filing an action in federal district court or by initiating an administrative adjudication proceeding. Administrative proceedings are conducted by an Administrative Law Judge, who holds hearings and issues a recommended decision.

Does the CFPB really help consumers? ›

We protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law. We arm people with the information, steps, and tools that they need to make smart financial decisions.

Are CFPB complaints effective? ›

Ninety-eight percent of complaints sent to companies by the CFPB receive timely responses.

What are the negatives of CFPB? ›

Critics of the CFPB have been trying for years to limit its power and independence, attacking the way the agency is structured and funded. Like federal banking regulators, its funding is not determined by lawmakers in Congress as part of the annual appropriations process.

Has the CFPB been successful? ›

In 2023, the CFPB filed 29 enforcement actions and resolved through final orders 6 previously-filed lawsuits. Those orders require lawbreakers to pay approximately $3.07 billion to compensate harmed consumers and pay approximately $498 million in civil money penalties.

Can the CFPB get your money back? ›

If you're having trouble with a credit card, you can submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372). If you're not satisfied with the merchant's response, you may be able to dispute the charge with your credit card company and have the charge reversed. This is sometimes called a chargeback.

Can I negotiate repossession? ›

It is possible to continue negotiations with a lender even after the car has been repossessed. Another alternative may involve negotiating over the arrears on your loan with the lender.

Where do CFPB fines go? ›

Civil Penalty Fund

A civil money penalty is a fine that the government can issue for certain violations of consumer protection laws. Whenever we collect a civil money penalty through an enforcement action, the money is deposited into our victims relief fund, called the Civil Penalty Fund.

What is the junk fee rule? ›

On April 3, 2023, Congress introduced the Junk Fee Prevention Act, which would require covered entities to “clearly and conspicuously display” the total price of an advertised good or service, “including any mandatory fees,” when the price is first displayed to consumers.

What is the Junk fee Reduction Act? ›

This bill establishes requirements related to the fees charged by specified covered businesses, including those providing short-term lodging, ticketing services, internet service, mobile service, or video programming. It also requires air carriers to seat each young child next to an accompany adult during flights.

What is the new junk fee law? ›

The Junk Fee Prevention Act, introduced last April, pushes sellers to conspicuously display the full price, including all fees, in every advertisem*nt and initial consumer interaction.

Do banks take CFPB complaints seriously? ›

The complaints may be vague and unsupported but banks have to take them seriously, he said. If the CFPB decides to take an enforcement action based on complaints, legal costs for banks defending action can be tens of millions of dollars a month.

Does a company have to respond to a CFPB complaint? ›

The company will communicate with you as needed and respond to the issues in your complaint. Companies generally respond in 15 days. In some cases, the company will let you know their response is in progress and provide a final response in 60 days.

What happens when you file a complaint with CFPB? ›

What happens after I submit? After you've submitted your complaint you can check its status at or by calling us at (855) 411-CFPB (2372). We'll also send you email updates along the way so you know where you are in the process, and what's next.

How long does MLO have to respond to CFPB? ›

Your company reviews the complaint, communicates with the consumer as appropriate, and determines what actions to take in response. Your company provides a response within 15 calendar days. If your response is not final, let us know. Your company will then have up to 60 calendar days to provide a final response.

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