Date: July 30, 2015Author: Denbeaux & Denbeaux
The Consumer Financial Protection Bureau (CFPB) has charged two companies related to Western Union and Fidelity National approximately $38 million in total fines for allegedly guiding consumers into home mortgage payment plans that caused extra fees.
At issue is was the promise made to consumers of “tens of thousands of dollars of interest savings” to homeowners if they made more frequent mortgage payments. According to the CFPB, 125,000 consumers paid approximately $33 million in fees since July 2011.
“Deceptive advertising has no place in the financial marketplace,” said CFPB Director Richard Cordray in a press release. “Today’s action is delivering relief for consumers deceived by Paymap and LoanCare, and sending a clear message that these practices will not be tolerated.”
Below is the entire press release from the CFPB.
Consumers Deceived by “Equity Accelerator” Claims to Receive $33.4 Million
Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) took action today against Paymap Inc. and LoanCare, LLC for deceiving consumers with advertisements for a mortgage payment program that promised tens of thousands of dollars in interest savings from more frequent mortgage payments. Under the terms of the orders announced today, Paymap will return $33.4 million in fees to consumers and pay a $5 million civil penalty to the CFPB, and LoanCare will pay a $100,000 civil penalty.
“Deceptive advertising has no place in the financial marketplace,” said CFPB Director Richard Cordray. “Today’s action is delivering relief for consumers deceived by Paymap and LoanCare, and sending a clear message that these practices will not be tolerated.”
Paymap Inc. is a Colorado-based payment processing company, and LoanCare Servicing is a Virginia-based residential mortgage servicer. Together, they marketed and provided the “Equity Accelerator Program” – an electronic payment system that enables consumers to make automatic mortgage payments via electronic debits from their bank accounts. Consumers are typically charged an enrollment fee of $295 when signing up for the Equity Accelerator Program, and a transaction fee for each automatic debit that Paymap makes, typically $2.50. Since July 21, 2011, approximately 125,000 consumers enrolled in the Equity Accelerator Program and paid Paymap $33.4 million in fees.
Paymap partnered with many mortgage servicers, including LoanCare, to market the Equity Accelerator to the mortgage servicers’ customers. LoanCare and Paymap marketed the Equity Accelerator to LoanCare’s customers in 2012 by sending them solicitations on LoanCare’s letterhead. Like the other servicers it partnered with, Paymap shared a portion of consumers’ fees with LoanCare.
Paymap and LoanCare advertised that consumers who enrolled in the Equity Accelerator Program would have a new, biweekly payoff schedule that would lead to significant interest savings because of the more frequent payments. In fact, the Equity Accelerator Program did not make more frequent payments on consumers’ mortgages, and, Paymap’s prominent claims of tens of thousands of dollars in interest savings were made without any supporting evidence.
The CFPB found that Paymap and LoanCare violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibition against deceptive acts and practices. Specifically, the Bureau found that consumers were:
Pursuant to the Dodd-Frank Act, the CFPB has the authority to take action against companies engaging in unfair, deceptive, or abusive practices in the consumer financial marketplace.
Under the terms of the consent order filed today, Paymap is required to:
Under the terms of the consent order filed today, LoanCare is required to:
A copy of the consent order for Paymap filed today is available at:
A copy of the consent order for LoanCare filed today is available at: