CFPB Settles with Contract for Deed Companies for Engaging in Deceptive Acts and Practices and Violating Credit Reporting Rules

The settlement includes civil money penalties and requirements for companies to implement new policies.

6/24/2020 8:00 AM

NewsCFPB
CFPB Settles with Contract for Deed Companies for Engaging in Deceptive Acts and Practices and Violating Credit Reporting Rules

The Consumer Financial Protection Bureau settled with Harbour Portfolio Advisors, LLC (Harbour); National Asset Advisors, LLC (NAA); and National Asset Mortgage, LLC (NAM), companies that worked together to issue contracts for deeds to consumers. Under the terms of the contracts, consumers repaid a fixed principal over a term of years with interest, according to a news release from the CFPB.

The news release continues:

Harbour’s business plan was to acquire foreclosed properties in bulk, at auction, from entities such as Fannie Mae and Freddie Mac, and resell them to individual consumers. Harbour targeted potential buyers who were for the most part unable to obtain conventional financing and offered them financing through contracts for deed.  Between 2012 and 2016, several thousand consumers initiated contracts for deeds with Harbour. 

NAA and NAM, as Harbour’s agents, then serviced the contracts by collecting payments, fielding disputes from consumers, and speaking with consumers about the contracts’ terms. Harbour is a Texas limited-liability company. NAA and NAM are South Carolina limited-liability companies; NAA dissolved in 2018.  As Harbour’s agent, NAM furnishes consumer credit information to credit-reporting agencies.

The bureau’s investigation found that between 2012 and 2016, when consumers called NAA or NAM to complain about errors on their consumer reports relating to their financing with Harbour, they were sometimes told that they had to file a dispute with the consumer-reporting agency. These representations were inaccurate and constituted deceptive acts and practices in violation of the Consumer Financial Protection Act.

Regulation V, which implements the Fair Credit Reporting Act, required NAA or NAM to investigate written disputes and contact the consumer-reporting agency to resolve any errors. Also, either company could investigate a consumer-reporting complaint based solely on a consumer’s phone call, and if they discovered an error, could fix the error by contacting the consumer-reporting agency. The bureau also found that NAM lacked adequate policies and procedures to protect the accuracy and integrity of information furnished to consumer-reporting agencies, in violation of Regulation V.

Under the settlement, Harbour will pay a $25,000 civil money penalty to the bureau, and NAA and NAM will jointly pay a $10,000 civil money penalty to the bureau. The companies also agreed not to misrepresent or assist others in misrepresenting, expressly or impliedly, how consumers can resolve errors in their consumer reports or any other material fact concerning their consumer reports. NAM agreed to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information that it furnishes to consumer-reporting agencies, and a plan to review such policies and procedures periodically to update them as necessary to ensure their continued effectiveness.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


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CFPB Settles with Contract for Deed Companies for Engaging in Deceptive Acts and Practices and Violating Credit Reporting Rules

The Consumer Financial Protection Bureau settled with Harbour Portfolio Advisors, LLC (Harbour); National Asset Advisors, LLC (NAA); and National Asset Mortgage, LLC (NAM), companies that worked together to issue contracts for deeds to consumers. Under the terms of the contracts, consumers repaid a fixed principal over a term of years with interest, according to a news release from the CFPB.

The news release continues:

Harbour’s business plan was to acquire foreclosed properties in bulk, at auction, from entities such as Fannie Mae and Freddie Mac, and resell them to individual consumers. Harbour targeted potential buyers who were for the most part unable to obtain conventional financing and offered them financing through contracts for deed.  Between 2012 and 2016, several thousand consumers initiated contracts for deeds with Harbour. 

NAA and NAM, as Harbour’s agents, then serviced the contracts by collecting payments, fielding disputes from consumers, and speaking with consumers about the contracts’ terms. Harbour is a Texas limited-liability company. NAA and NAM are South Carolina limited-liability companies; NAA dissolved in 2018.  As Harbour’s agent, NAM furnishes consumer credit information to credit-reporting agencies.

The bureau’s investigation found that between 2012 and 2016, when consumers called NAA or NAM to complain about errors on their consumer reports relating to their financing with Harbour, they were sometimes told that they had to file a dispute with the consumer-reporting agency. These representations were inaccurate and constituted deceptive acts and practices in violation of the Consumer Financial Protection Act.

Regulation V, which implements the Fair Credit Reporting Act, required NAA or NAM to investigate written disputes and contact the consumer-reporting agency to resolve any errors. Also, either company could investigate a consumer-reporting complaint based solely on a consumer’s phone call, and if they discovered an error, could fix the error by contacting the consumer-reporting agency. The bureau also found that NAM lacked adequate policies and procedures to protect the accuracy and integrity of information furnished to consumer-reporting agencies, in violation of Regulation V.

Under the settlement, Harbour will pay a $25,000 civil money penalty to the bureau, and NAA and NAM will jointly pay a $10,000 civil money penalty to the bureau. The companies also agreed not to misrepresent or assist others in misrepresenting, expressly or impliedly, how consumers can resolve errors in their consumer reports or any other material fact concerning their consumer reports. NAM agreed to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information that it furnishes to consumer-reporting agencies, and a plan to review such policies and procedures periodically to update them as necessary to ensure their continued effectiveness.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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