Flagstar Bank of Maryland has been hit with a massive fine ($10M) and will be forced to pay $27.5M in restitution to almost 7000 of its borrowers, after being cited by the CFPB for a string of poor business practices that led to an estimated 2000 unnecessary foreclosures. According to CNN:
The agency cited Flagstar for a long list of failures, including:
- Taking so long to review loan adjustment applications that the documents would expire and the application would be closed.
- Taking too long to approve or deny a loan modification with foreclosure just days away.
- Failing to notify borrowers their applications were incomplete, which a bank is required to do.
- “Routinely miscalculating” borrower income, and therefore wrongfully denying modifications.”
The list goes on and on. The announcement came just days after U.S. Bank was similarly ordered to pay almost $60M in refunds and fines. Since the CFPB’s creation, it has ordered almost $5B in customer refunds from banks and other financial institutions.