DS News

68 CFPB PENALIZES PAYMAP FOR DECEPTIVE ADS; LOANCARE ALSO IMPLICATED In late July, the Consumer Financial Protection Bureau (CFPB) announced an enforcement action taken against Paymap Inc., for deceptive advertisement practices used to market a mortgage payment program. e CFPB ordered that Paymap return $33.4 million in fees to consumers and pay a $5 million civil penalty to the Bureau. In addition, LoanCare, LLC must also pay a $100,000 civil penalty to the Bureau. When questioned about the vast difference in the penalty amounts, Samuel Gilford, a spokesperson for the CFPB told DS News, "Regarding the size of the civil money penalties, the Dodd-Frank Act provides a framework for assessing civil money penalties, and requires the Bureau to take into consideration a number of factors, including the size of the respondent, the respondent's financial resources, its good faith efforts to comply with the law and cooperate with the Bureau, the gravity of the violations, the severity of the losses to consumers, any history of previous violations, and other matters as justice requires." He added, "I'd also note that Paymap is the creator and operator of the equity accelerator program." According to the CFPB, Paymap, a Colorado-based payment processing company partnered with LoanCare Servicing, a Virginia-based residential mortgage servicer to market their Equity Accelerator program. e CFPB also noted, "Paymap partnered with many mortgage servicers, including LoanCare, to market the Equity Accelerator to the mortgage servicers' customers. Like the other servicers it partnered with, Paymap shared a portion of consumers' fees with LoanCare." e question the Bureau refused to answer was how this partnership with LoanCare was different from any other partnership Paymap entered into in the industry. Instead, spokeperson Gilford said, "We cannot discuss non-public enforcement activities, but the Bureau will address violations of Federal consumer financial laws as appropriate." e Bureau contended Paymap falsely promised consumers would save tens of thousands of dollars in interest from making bi-weekly mortgage payments through an electronic payment system that draws debits from their bank accounts when in fact, borrowers saved little, if any. To enroll in the Equity Accelerator program, consumers are typically charged an enrollment fee of $295 and a transaction fee of $2.50 for each automatic debit Paymap makes. Approximately 125,000 consumers enrolled in the program since July 21, 2011 and paid Paymap $33.4 million in fees. In the release, the CFPB said Paymap and LoanCare deceptively advertised that consumers who enrolled in the program would have a new, biweekly payoff schedule that would lead to "significant interest savings because of the more frequent payments." (Continued on page 69)

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