Which California Mortgage Lender Companies Have Violated Consumer Protection Laws?

Buying a home is both a big decision and a big investment, and finding a mortgage lender is an important part of that often daunting process. In some circumstances, certain mortgage lender companies may not have their clients’ best interests at heart, and may seek to take advantage of them. But the power imbalance between lender and client is significant—so who can keep mortgage lenders in check?

There are a few key players and consumer protection laws that regulate the mortgage industry and hold lenders accountable.

What Mortgage Lender Laws Protect Me?

A number of mortgage lender laws and regulations are in place to protect consumers from predatory or unfair lenders.

Congress has passed a number of regulations at the federal level to protect consumers with mortgages.

The Truth in Lending Act is one such regulation (also known as Regulation Z) which was introduced back in 1968 as a method of standardizing how lenders convey the borrowing cost to consumers, as well as restricting certain lending practices and prevent mortgage lender companies from misleading their clients.

These consumer protection laws work to adjust the power imbalance between mortgage lender companies and clients, giving consumers powers and protections against predatory lenders and hidden fees while adding preventative measures and requirements for the lenders.

Predatory lending practices were targeted in another government crackdown in the wake of the 2007–08 financial crisis with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

A number of entities enforce these regulations, primarily the Consumer Financial Protection Bureau (CFPB). The Federal Reserve supervises the banking industry, including mortgage lenders, and the U.S. Department of Housing and Urban Development (HUD) oversees Federal Housing Administration (FHA) programs that provide mortgage insurance to home buyers.

New California Consumer Protection Laws

California introduced a new addition to its consumer protection laws in September. On Sept. 25, 2020, California Governor Gavin Newsom signed the California Consumer Financial Protection Law (CCFPL) into law. The law had been passed by the state legislature nearly a month previously, on Aug. 31, 2020.

The CCFPL renames California’s Department of Business Oversight (DBO) the Department of Financial Protection and Innovation (DFPI). The new law is meant to expand the newly-renamed DFPI’s regulatory authority, as well as promote access to responsible and affordable credit.

“Taking effect Jan. 1, 2021, the California Consumer Financial Protection Law (CCFPL) will expand our enforcement powers to protect California consumers from pandemic-inspired scams, promote innovation, clarify regulatory hurdles for emerging products and increase education and outreach for vulnerable groups,” reads the DFPI’s website.

Financial institutions in California (including those based there as well as those just doing business there) will now be contending with a new, powerful regulatory authority. California is not the first state to introduce a sort of mini-CFPB, but this new regulator has resources and authority that other incarnations of such an entity have not had. The size of the state also contributes to this power.

Nonbank mortgage lender companies may feel the effects of this law most immediately due to statutory exclusions for regulated banks. The DFPI has new provisions regarding unfair, deceptive and abusive acts and practices, and will be able to bring civil actions under the Dodd-Frank Act’s consumer protection provisions against all state-licensed banks and nonbank financial companies.

Which Mortgage Lender Companies Are Being Investigated?

A team of attorneys are currently investigating a number of mortgage lender companies, such as certain major banks and mortgage companies. These companies include:

• Bank of America
• Caliber Home Loans
• Capital One
• Fairway Independent Mortgage
• Freedom Mortgage
• HSBC
• Loan Depot
• Navy Federal PNC
• Quicken Loans
• Union Bank
• United Wholesale Mortgage
• US Bank
• Wells Fargo

Regulation of Mortgage Lender Companies in California

Mortgage lender companies can be held accountable for their predatory or unfair practices. The new CCFPL expands on regulatory powers California has been wielding against mortgage companies for years.

For instance, back in 2012, then–Attorney General Kamala Harris announced a commitment from the state of up to $18 billion for thousands of struggling homeowners in the mortgage crisis.

“California families will finally see substantial relief after experiencing so much pain from the mortgage crisis,” said then–AG Harris. “Hundreds of thousands of homeowners will directly benefit from this California commitment.”

The agreement was part of a settlement over bank servicing and foreclosure misconduct. “We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending,” said Harris.

And earlier this year, the Federal Trade Commission (FTC) fought against a California-based mortgage broker over allegations that it violated the Fair Credit Reporting Act and other laws by revealing consumers’ personal information. The mortgage broker agreed to pay $120,000 to settle these allegations.

Filing a Mortgage Lender Lawsuit in California

A growing number of people are coming forward to file a mortgage lender lawsuit with allegations of a number of issues with their mortgage lender companies, including billing, past due payments, foreclosure, and interest rates.

If you live in California and had a dispute with your mortgage lender sometime in the past year over one of these issues, you may be able to join a free class action mortgage lender lawsuit investigation and pursue compensation.

Filing a mortgage lender lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.