On October 19, 2026, the Michigan Department of Insurance and Financial Services (DIFS) entered a consent order with a licensed mortgage servicer resolving allegations under the Real Estate Settlement Procedures Act’s Regulation X, the Federal Trade Commission’s Safeguards Rule, and Michigan’s Mortgage Brokers, Lenders, and Servicers Licensing Act. The servicer accepted DIFS’s allegations and separately stipulated that it violated the Act’s restrictions on certain transfers of mortgage loans or related securities to individual investors.
Specifically, DIFS alleged that the servicer:
- Failed to meet annual escrow-statement requirements. DIFS cited Regulation X’s annual escrow account statement provision and Michigan requirements concerning annual statements and borrower account histories.
- Failed to maintain required customer-information disposal procedures. DIFS cited the Safeguards Rule provision requiring procedures for secure disposal of customer information.
- Violated Michigan mortgage licensing and examination requirements. DIFS cited provisions concerning examinations, compliance with applicable laws, and required borrower account statements and histories.
The servicer separately accepted violating Michigan’s restrictions on transferring or assigning mortgage loans or related securities to certain individual investors.
Under the order, the servicer must pay a $15,000 fine, implement servicing software, provide DIFS with specified servicing records, and undergo independent compliance audits every six months for two years. It must retain audit records for five years.
Putting It Into Practice: Multiple states have continued to focus enforcement activities on licensing and compliance obligations across mortgage servicing and related activities (previously discussed here and here). Mortgage servicers should test whether their escrow statements, customer information disposal practices, servicing records, and investor transfer procedures meet applicable state and federal requirements, and update their controls where needed.