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The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in federal court yesterday alleging that Freedom Mortgage Corp. submitted legally required mortgage loan data that was riddled with errors, according to a CFPB press release. The CFPB alleges that Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals. “The CFPB is suing Freedom Mortgage for violating a law enforcement order and for providing false data on its mortgage operations,” said CFPB Director Rohit Chopra. “The CFPB will continue to focus on ending the cycle of misconduct by repeat offenders in the financial industry.” Freedom Mortgage Corp. is a privately held nonbank mortgage loan originator and servicer headquartered in Boca Raton, Fla. In 2020, Freedom reported HMDA data on over 700,000 mortgage loan applications and originated nearly 400,000 HMDA-reportable loans worth almost $100 billion.

Consumer Financial Protection Bureau Director Rohit Chopra said if an attempt to invalidate his agency's funding is successful before the Supreme Court, it would add more uncertainty for the mortgage industry and create "a lot of headaches" for consumers, YahooFinance.com reported. “I think [on] the whole financial markets are much better off with the CFPB there,” Chopra told Yahoo Finance on Friday. "I think if a CFPB had existed in the early 2000s, we wouldn't have had a subprime mortgage crisis." The interview with Chopra was his first since the Supreme Court heard oral arguments this week in a challenge to the funding structure of the CFPB, a financial regulator that was created by Sen. Elizabeth Warren (D-Mass.) in the aftermath of the subprime housing meltdown and financial crisis in 2008. Payday lenders, who brought the challenge, have argued that the CFPB's funding that it receives through the Federal Reserve is unconstitutional and that funding should be appropriated by Congress. The Supreme Court justices, however, appear likely to uphold that structure based on what transpired Tuesday, when some of them sounded skeptical of the arguments made by the payday lenders.

The Consumer Financial Protection Bureau (CFPB) today took action against Tempoe, LLC for tricking consumers into expensive leasing agreements by concealing the contract terms and costs, and failing to provide legally required disclosures, according to a CFPB press release. Forty-one states and the District of Columbia are entering into a parallel multi-state settlement addressing the same conduct. Tempoe offered financing at the point of sale to customers at major retailers such as Sears and Kmart. By hiding the true nature of the agreements, Tempoe tricked consumers into signing the leases, and consumers found themselves unable to return products and on the hook for unexpectedly large payments. The CFPB is permanently banning Tempoe from offering consumer leases, requiring the company to close each of its outstanding consumer accounts, and ordering the company to let customers keep leased merchandise with no further payment, representing approximately $33.6 million in released payments. Tempoe is also paying a $2 million penalty, with $1 million deposited into CFPB's victims relief fund and $1 million paid to the states entered into the settlement.

The Consumer Financial Protection Bureau (CFPB) entered into a proposed settlement with a ring of corporate entities operating some of the largest credit repair brands in the country, including Lexington Law and CreditRepair.com, according to a CFPB press release. The agreement follows a ruling from the court that the companies collected illegal advance fees for credit repair services through telemarketing in violation of federal law. If approved, the settlement would impose a $2.7 billion judgment against the companies. The order will also ban the companies from telemarketing credit repair services for 10 years. Lexington Law and CreditRepair.com are the largest credit repair brands in the country. The credit repair services are marketed and offered through a web of related entities in the Salt Lake City area, including PGX Holdings, Progrexion Marketing, and the John C. Heath, Attorney-at-Law PC law firm. During the time period relevant to the lawsuit, the companies operated nationwide and had more than 4 million customers who were subjected to telemarketing. In 2022, the defendants had combined annual revenues of approximately $388 million. The CFPB previously sued the companies to halt their illegal conduct and seek redress and other relief. In March 2023, the district court ruled that the defendants violated the advance fee provision of the Telemarketing Sales Rule. The Telemarketing Sale Rule provides a range of protections for consumers related to telemarketing and sets payment restrictions for certain goods and services. It requires credit repair companies to wait until six months after they provide the consumer with documentation reflecting that the promised results were achieved, before they request or receive payment from the consumer.

A U.S. consumer finance regulator sued a subsidiary of fintech lender Curo Group Holdings Corp on Tuesday, alleging it pushed struggling borrowers to refinance short-term loans to keep them in debt and reap fees, Reuters reported. The U.S. Consumer Financial Protection Bureau (CFPB) said in the lawsuit filed in federal court in Greenville, S.C., that Heights Finance Holding Co. violated laws against unfair and abusive lending practices by "churning" loans through repeated refinancing, putting around 10,000 borrowers in continuous debt from 2013 to at least 2020. The agency sought an unspecified fine, refunds for harmed consumers, and an order barring the company from violating the law. CFPB Director Rohit Chopra said that what the company "sold as a financial lifeline was, in reality, pushing customers into financial quicksand." Curo issued a statement on Tuesday saying the case related to small loans originated by subsidiaries of Heights Finance before Curo acquired the company for $360 million in late 2021 from private equity firm Milestone Partners.

The Consumer Financial Protection Bureau (CFPB) on Wednesday filed a lawsuit in federal court against auto-loan servicer USASF Servicing (USASF) for a host of illegal practices that harmed individuals with auto loans, according to a CFPB press release. These practices include wrongfully disabling borrowers’ vehicles, improperly repossessing vehicles, double-billing borrowers for insurance premiums, and failing to return millions of dollars in refunds to consumers. The CFPB is seeking to obtain redress for consumers and civil money penalties and stop any future violations. “The CFPB is suing USASF for a range of misconduct, including illegally activating devices that prevented borrowers from starting their cars,” said CFPB Director Rohit Chopra. “Given the rising cost of cars during the pandemic and jump in auto loan debt across the country, the CFPB is working to root out illegal activity in this market.” USASF is an auto-loan servicer headquartered in Lawrenceville, Georgia. USASF serviced auto loans that were originated by an affiliate, U.S. Auto Sales, Inc., which was a buy-here-pay-here auto dealer and lender with 31 dealerships in the Southeast. USASF offered both Guaranteed Asset Protection and collateral-protection insurance, which are products that consumers can buy when they buy or lease a car. In April 2023, U.S. Auto Sales wound down most of its businesses.