The COVID-19 pandemic caused widespread uncertainty among consumers, and many families were forced to make hard decisions about how to allocate their resources. Unfortunately, amidst these uncertainties, some lenders didn’t follow the provisional pandemic policies put into place to protect consumers.
Learn how some loan providers took advantage of consumers during the pandemic and how to protect yourself if lenders violate your consumer rights.
Illegal Late Fees
One of the most prevalent issues experienced during the height of the pandemic were providers charging late fees during forbearances. Due to high unemployment and financial hardship caused by the pandemic, the government allowed loan holders to request forbearances.
Forbearances are periods of time when loan payments are put on pause, and the federal government required loan providers to grant forbearances during the COVID-19 pandemic.
However, some companies charged illegal late fees for delayed payments during forbearance. Loan holders are not held responsible for delayed payments when forbearance is requested/approved. Loan providers knew this, and, unfortunately, some of them took advantage of people to profit from fees.
False Information About Pandemic Consumer Protections
New provisional policies were adopted during the pandemic, and many consumers were unfamiliar with their protections under these new pandemic policies. It was up to lenders to honor/ follow pandemic guidelines. While many companies were transparent and based their work on guidelines laid out in the CARES Act, others took the opportunity to spread false information and benefit themselves.
The CFPB Took Action Against Carrington Mortgage for Cheating Homeowners out of CARES Act Rights
For example, according to the CFPB, Carrington Mortgage told borrowers that they would have to make payments that weren’t required and made claims about foreclosure threats that weren’t true.
Sabotaging Homeowner Credit Reports
When borrowers requested forbearances during the pandemic, some companies would report false information that negatively impacted their credit reports. In Carrington’s case, the company would claim that an account was behind on payments, even during periods of forbearance. Ultimately, Carrington ignored forbearances altogether, continuing to operate under “normal circumstances.” According to the CFPB, “Carrington illegally furnished information to consumer reporting companies that certain borrowers’ accounts were delinquent, rather than current, even though the homeowners’ accounts were currently entering forbearance.”
CFPB Enforcement Actions – Fighting Pandemic Violations
Carrington wasn’t the only one acting this way. Unfortunately, other loan providers also took advantage of consumer uncertainty, negatively impacting borrowers’ credit and loan history.
The Holland Law Firm is a team of talented and experienced consumer rights and identity theft lawyers. We’ll help fight back against unfair business practices and seek damages when necessary.
If unlawful actions of lenders have negatively impacted your credit reports or your life, contact us for a free consultation.