Month: April 2024

CFPB highlights actions to combat mortgage servicers’ “junk fees”

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On April 24, the Consumer Financial Protection Bureau (CFPB) published an edition of its Supervisory Highlights that emphasizes the agency’s actions to combat “junk fees” charged by mortgage servicers. You can read the publication here.  

Examples of the illegal activities revealed by CFPB examinations included charging prohibited property inspection fees, sending deceptive notices to homeowners, and violating loss mitigation rules. The publication touts that in response to the agency’s findings, financial institutions refunded fees to borrowers and stopped illegal practices.

The agency also claims its examiners found some mortgage servicers failed to waive late fees and penalties that should have been waived because of COVID rules. Further, some servicers were cited for making late tax and insurance payments, causing borrowers to incur interest and penalties.

Last October, the agency announced its examination work from February to August of 2023 resulted in $140 million refunds to consumers for unlawful junk fees in the areas of bank account deposits, auto loan servicing, and international money transfers. Since that time, the agency states its work has resulted in an additional $120 million refunds to consumers in junk fees in the area of bank account deposits.

Richland County passes short-term rental regulations

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Richland County passed an ordinance on April 9 to attempt to regulate short-term rentals. The ordinance requires Airbnbs, VRBO and other short-term rentals to obtain business licenses and pay a 3% accommodation tax monthly.

The ordinance applies only to unincorporated areas of Richland County, but the City of Columbia previously passed a similar ordinance.  Other South Carolina jurisdictions have similar regulations.

Short-term rentals are described as being 30 days or less in duration. The properties will be subject to safety inspections, according to the ordinance. The properties will be required to have at least two parking spaces, and the operators will be required to keep records of all guests who have stayed at the properties during the past two years. The records must include the contact information of the guests.

The County has estimated that it will have no more than 100 short-term rentals particularly since they are only allowed in a handful of mixed-use and commercially-zoned areas of the county. They are not allowed in single-family neighborhoods. The cost of the business licenses will be determined by the annual revenue of the property.

Is your insurance company spying on your house?

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This blog has discussed several times the difficulty of getting and maintaining homeowner’s insurance in some locations, especially coastal areas. This appears to be an extremely difficult issue in Florida, and I have heard similar concerns along South Carolina’s coast.

The Wall Street Journal is now reporting that insurance companies are increasingly using aerial images from drones and balloons as a tool to cancel insurance on properties deemed as higher risk. You can read the article here. Googling the topic also reveals several related stories.

Apparently, angry homeowners are reporting losing coverage because of images reflecting damaged roofs, debris in yards, and undeclared hazards such as swimming pools and trampolines.

Consumer advocates object to this tactic on privacy and other grounds. For example, the images could be outdated or otherwise inaccurate. Time frames for correcting the problems may be too short. And the secrecy of the “inspections” may be deemed to be unfair.

State law may require inspection reports to be delivered to the consumer, and some state laws may limit the reasons insurance companies may use to fail to renew coverage.

According to the articles, insurance companies find the use of aerial images is an efficient way to capturing data. The technology is sophisticated and continues to improve. The companies also claim that weeding out risky properties through visual inspections helps everyone by decreasing claims.

Of course, this issue arises as we are seeing increasing premiums in homeowner’s coverage.  Count on homeowner’s coverage continuing to be in the news.