New York (PRWEB) June 28, 2014
Strategic Consulting Services (http://www.strategiccs.org), a New York firm providing client-focused financial consulting for consumers, warns that borrowers are being overcharged and targeted for deceptive marketing practices by lenders. Recent settlements and legal rulings have totaled into the billions of dollars in fines against large banks for their delusive and illegal lending practices. For consumers, it is a positive sign that the U.S. government is continuing its pressure in reforming the financial industry with high-profile fines and settlements against lenders. However the fact that such pressure and penalties are required indicates that industry and national reform continue to be needed.
A $968 million settlement was announced this month between SunTrust Mortgage and a combination of the Consumer Financial Protection Bureau (CFPB), the Department of Housing and Urban Development (HUD), the Department of Justice (DOJ), and attorneys general of 49 states. The payment will settle complaints that the company violated laws governing mortgage origination and servicing, plus robo-signing documents illegally for foreclosures. Of this settlement amount, $500 million will be directed to relief of struggling borrowers, $418 million to the DOJ for faulty loans between 2006 and 2012, $40 million in restitution to almost 48,000 of its former customers, and a $10 million fine to the US government. "SunTrust's conduct is a prime example of the widespread underwriting failures that helped bring about the financial crisis," said U.S. Attorney. Gen. Eric H. Holder Jr.
A second case this month had the CFPB and DOJ ordering GE Capital Retail Bank (renamed earlier this month to Synchrony Bank) to pay $224 million in refunds to customers for deceptive card practices (complaint Case No. 2:14-CV-00454). This total reimburses $56 million to 638,000 consumers who were misled about “free” add-on products that were charged to them without their knowledge. The other $169 million goes to 108,000 borrowers excluded from debt relief offers because they asked to receive communications in Spanish or lived in Puerto Rico. This amount makes this case the largest credit card discrimination settlement in history. Synchrony Bank has over $39 billion in assets from their business of issuing store-branded credit cards to consumers on behalf of merchants and retailers.
These two announcements come following rulings from the CFPB earlier this year against Bank of America, City National Bank, and American Express to pay a total of $838 million for illegal lending and servicing practices. In the case with Bank of America, the CFPB believes that as many as 1.4 million consumers were subject to deceptive marketing. These lenders charged unauthorized fees, were deceptive with consumers, and failed to comply with Federal requirements when investigated. Such behavior and disregard for client and regulation is surprising from financial institutions of this size. Even as lawsuits and regulators uncovered the issues with these large organizations, this behavior is a reflection of the current industry and what the market will allow.
“For consumers the action spearheaded by the CFPB shows a clear change from the type of government action and oversight that our nation would have seen compared to twenty years ago or longer. These large settlements and court cases show progress, that there is justice when companies act improperly and that there are consequences to protect those who were harmed. Yet, despite large rulings and steps to protect consumers, it is still a shame that lenders are behaving in such a way that requires government oversight and fines pushing into the billions of dollars,” says Ben Kittle, Senior Financial Consultant at Strategic Consulting Services. ”When fines against lenders hit hundreds of millions of dollars for deceit against consumers, it shows a culture of unbridled greed, rather than serving the consumer’s best interests.”
About Strategic Consulting Services
Strategic Consulting Services is a financial services firm with teams specialized in Debt Management, Mortgages and Business Services. With a comprehensive client-focused approach, the Company provides assessments looking beyond immediate financial issues to help clients build greater financial strength with smart habits and choices. Since 2007, Strategic Consulting Services has helped individuals and small businesses create savings plans, reduce debt, and make wiser spending choices. For more information visit http://www.strategiccs.org.