Are you considering a home loan from Carrington Mortgage Services? A recent investigation by the Consumer Financial Protection Bureau (CFPB) raises numerous questions about the legitimacy of their business practices. In this blog post, we will try to answer why Carrington Mortgage is under investigation and what customers should be aware of before making any big decisions. From possible violations regarding foreclosure protections for military service members to discrimination in lending practices, it’s important to educate yourself on the potential issues that may arise if you choose to go with Carrington Mortgage Services. Read on for more details!
Who Is Carrington Mortgage?
Carrington Mortgage Services is a non-bank mortgage servicer headquartered in Anaheim, California. They have been in operation since 2003. The company originally began as an originator of subprime home loans. Eventually, it expanded to include mortgage lending, asset management, debt, and equity investments, capital markets activities, and risk management services. In 2014, the U.S. Consumer Financial Protection Bureau began investigating the company for potential violations of consumer protection laws. Carrington is a nationwide mortgage lender and servicer. That said, it’s true that some of these mortgages have government or government-backed backing (GSEs). As of September 2020, Carrington was responsible for servicing roughly 500,000 mortgage loans guaranteed by the federal government. The Federal Housing Administration insured more than 65%; the United States Department of Agriculture guaranteed almost 20%; the Veterans Benefits Administration insured just over 10%; and government-sponsored enterprises insured just over 5%.
Carrington Mortgage Services is an established mortgage loan business that offers a variety of mortgage options with an emphasis on flexibility and convenience. These include government-backed FHA, VA, and USDA loans, jumbo loans for those who need to borrow more than conventional limits allow, and non-QM loans for the self-employed or those with unusual financial situations. Whether you’re starting out in life or planning for retirement, Carrington offers mortgages to meet everyone’s needs.
Carrington Mortgage’s Reputation
Carrington Mortgage has been under investigation for questionable practices, which has no doubt impacted the reputation of the company. The investigation, which began in 2017, has dealt with allegations of manipulation and illegal profiting off of customers who had refinanced their mortgages. Such alleged activities have led to public criticism aimed at Carrington, damaging its once-good standing in the mortgage industry. Those involved have had to face scrutiny, which has put a strain on all relations and dealings with this popular mortgage provider.Despite that, however, the company remains committed to doing business ethically and is optimistic about rebuilding its reputation among customers and within the industry moving forward.
Reason for the Investigation
It appears that Carrington Mortgage has come under investigation due to inconsistencies in its lending principles. Reports suggest that the company has conducted a multitude of practices related to the issuing of mortgages that have placed borrowers in precarious positions and caused them considerable losses. The Department of Justice, the Consumer Financial Protection Bureau, and other agencies have cited evidence that suggests Carrington Mortgage offered loans with unfair interest rates and terms, misled borrowers about loan qualifications, failed to assess loan applicants’ creditworthiness properly, and provided loans with inflated appraisals. Without further information coming to light, it is unclear exactly how far into the alleged malpractice they may have strayed in their operations.
Furthermore, according to a report by ProPublica, some are accusing the company of targeting minority borrowers for subprime loans with higher interest rates and fees. They believe that the goal of these loans is for them to lead to foreclosure. The report also highlights instances of Carrington Mortgage offering better loan terms to white borrowers with similar credit scores.
Disparate Impact
This practice, known as “disparate impact” lending, is illegal under the Fair Housing Act. It prohibits lenders from discriminating against borrowers based on race, color, national origin, religion, sex, familial status, or disability. Disparate impact occurs when lenders use seemingly neutral lending criteria that have a discriminatory impact on protected classes. In the case of Carrington Mortgage, the company is accused of using credit scores and debt-to-income ratios to justify higher interest rates and fees for minority borrowers, even when they had good credit and financial standing.
Lawsuits Against Carrington Mortgage
The allegations against Carrington Mortgage have already led to several lawsuits. In January 2021, the National Fair Housing Alliance (NFHA) filed a complaint against the company, alleging it engaged in discriminatory lending practices in 12 metropolitan areas across the United States. The complaint seeks damages for the harm caused to minority borrowers and calls for an injunction to prevent Carrington Mortgage from engaging in future discriminatory practices. There was another lawsuit by the Consumer Financial Protection Bureau (CFPB) in August 2021. In that case, the CFPB accused Carrington Mortgage of violating the Equal Credit Opportunity Act by discriminating against minority borrowers.
Impact on Customers
Inevitably, the probe into Carrington has impacted the company’s clientele. Customers who have recently taken out loans are being forced to wait for their paperwork to be processed as most of the company’s resources are occupied with dealing with the investigation. Meanwhile, those who had already closed on a loan prior to the investigation are struggling to get the necessary information from Carrington regarding their account. Some of them often wait long periods before even receiving a response. With numerous complaints filed against it, the worry is that Carrington customers could suffer permanent financial damage due to delays in resolving any irregularities found in their accounts.
It is still unknown how much longer this investigation will take and what its ultimate impact will be on affected customers. Recent reports of an investigation into Carrington Mortgage have left many customers who have used the company for their mortgage and loan needs confused and concerned. That said, while the investigation is ongoing and more information may become apparent in the days and weeks to come, Carrington has stated that there should be no fear on the part of their customers. They have promised to honor all the business agreements they have made.
Harm to Borrowers
Questions have been raised about the lender’s disclosure of settlement terms, alleged misrepresentation of loan packages, and accusations that funds were taken from borrowers without authorization. If found guilty, this type of conduct could mean serious financial hardships for vulnerable individuals with mortgages through Carrington Mortgage. Officials are looking into whether customers had accurate information when they signed loan agreements. They are also looking into whether the lender treated them properly. It’s still unclear how many customers Carrington Mortgage’s practices may have negatively impacted. However, the DOJ investigation will certainly uncover any misconduct by the company.
Implications for the Mortgage Industry
The Carrington Mortgage investigation has important implications for the mortgage industry. This is because this case offers a lesson on the government’s ability to hold lenders accountable when it comes to federal lending regulations. The results of the investigation could potentially set a new standard for ethical practices in the industry. Lenders everywhere must take note and ensure that their procedures meet or exceed federal regulations or face similar consequences. Furthermore, potential borrowers should also be aware of their rights in order to protect themselves from unethical practices. Recent events have created an environment in which greater transparency is necessary. If this transparency gets established, it will only benefit the people in the mortgage process.
Carrington Mortgage’s Response
Carrington Mortgage Services has released statements in response to the ongoing investigation. They deny any wrongdoing and affirm their commitment to providing responsible and ethical services. The company’s spokesperson noted that investigators found no evidence of misconduct during the initial investigation. Furthermore, he has said that Carrington is ready to assist with all further inquiries. In addition, they have expressed a strong desire to maintain their good standing as a leader in their field and uphold legal standards that promote fair lending services. However, we don’t yet know the full implications of the investigation. That said, Carrington Mortgage Services remains committed to protecting customers while adhering to all applicable laws.
Conclusion
Hopefully, we’ve been able to answer the question of why Carrington Mortgage is under investigation. It’s evident from this investigation that Carrington needs to take aggressive steps in order to protect its borrowers and rebuild its reputation. Although some legal actions have been taken against the company, it is ultimately up to Carrington Mortgage itself to put sufficient measures into place to protect its customers. The extent of the impact the company’s actions have had on the mortgage industry is uncertain. However, one thing is for sure: those affected by Carrington Mortgage’s practices are likely still feeling repercussions from this event even today. Hopefully, the government and Carrington Mortgage itself will make sure these incidents don’t happen again in the future.