The CFPB has entered into a consent order with three companies to settle the Bureau’s claims that the companies violated the Dodd-Frank UDAAP prohibition and the FCRA in connection with contracts for deeds that they issued and serviced.  The settlement requires one of the companies to pay a $25,000 civil money penalty and the two other companies to jointly pay a $10,000 civil money penalty.

The consent order includes the following findings and conclusions of law:

  • Because the contracts for deeds required consumers to repay a fixed principal amount over a term of years with interest, they constituted “credit” and the company that issued the contracts (Harbour Portfolio Advisors) was a “covered person” subject to the Bureau’s jurisdiction.
  • The other two companies (National Asset Advisors and National Asset Mortgage (NAM)) were “covered persons” subject to the Bureau’s jurisdiction because they serviced the contracts by collecting payments, handled consumer disputes, and spoke with consumers about the contracts’ terms.
  • In carrying out its business to acquire foreclosed properties in bulk, at auction, from entities such as Fannie Mae and Freddie Mac, and resell them to individual consumers, Harbour typically targeted potential buyers who were unable to obtain conventional financing.
  • NAM furnished information about consumers’ payment histories to consumer reporting agencies.
  • The companies engaged in deceptive acts and practices by telling consumers complaining about credit report information that they could only initiate a credit dispute by filing a dispute with a consumer reporting agency.
  • NAM violated the FCRA and Regulation V by failing to establish and implement adequate policies and procedures regarding the accuracy and integrity of information furnished to consumer reporting agencies.

In addition to imposing civil money penalties, the consent order prohibits the companies from misrepresenting or assisting others in misrepresenting, expressly or impliedly, how consumers can initiate consumer report disputes or any other material fact concerning their consumer reports, requires NAM to establish and implement reasonable written policies and procedures as required by the FCRA and Regulation V regarding the accuracy and integrity of information furnished to consumer reporting agencies and to implement a compliance plan, and requires Harbour to register for the Bureau’s consumer complaint portal.