CFPB Sues Connecticut-Based Mortgage Lender

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On January 15, 2021, the Consumer Financial Protection Bureau (CFPB) announced it had filed suit in the United States District Court for the District of Connecticut against a Connecticut-based mortgage company and three individual defendants for alleged violations of the Truth in Lending Act (TILA)​, the Fair Credit Reporting Act (FCRA), the Equal Credit Opportunity Act (ECOA), the Mortgage Acts and Practice-Advertising Rule (MAP Rule), and the Consumer Financial Protection Act of 2010 (CFPA).

​The complaint alleges that the company and individuals engaged in unlawful mortgage-lending practices.  The company allegedly allowed unlicensed employees to engage in mortgage-origination activities when applicable laws required licensure.  According to the CFPB, the employees also regularly required consumers to submit documents for verification before issuing the consumers a loan estimate, in violation of TILA and its implementing regulation, Regulation Z.  Furthermore, employees allegedly failed to provide consumers with notice of adverse action whenever consumers were denied credit based on information in their consumer reports or in response to applications, in violation of ECOA.

The complaint further alleges that company representatives regularly made misleading representations or omissions to consumers in violation of the MAP Rule and CFPA regarding whether their employees were licensed mortgage-loan originators, whether consumers had been preapproved or guaranteed for a particular program or term, and whether and on what terms the consumers were likely to obtain refinancing.

​The CFPB seeks injunctions against the defendants as well as consumer redress, disgorgement of ill-gotten gains, and civil penalties.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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