Carrington Mortgage Lawsuit: CFPB Action and Class Settlements

Carrington Mortgage Services has been the subject of a Carrington Mortgage lawsuit or regulatory action on several fronts over the past decade, including a $5.25 million Consumer Financial Protection Bureau penalty for CARES Act violations, an $18.2 million class action settlement over phone and online payment fees, an $8.3 million lender-placed insurance settlement, a HUD Inspector General audit criticizing its FHA foreclosure practices, a 2011 agreement with the Ohio Attorney General, and a pending reverse-mortgage class action from which Carrington has since been dismissed. Most of these matters ended with refunds to borrowers, restrictions on future practices, or both.

CFPB Action Over CARES Act Forbearance Violations

On November 17, 2022, the Consumer Financial Protection Bureau issued a consent order finding that Carrington had cheated homeowners out of protections guaranteed by the CARES Act during the COVID-19 pandemic.¹ According to the Bureau, Carrington told some borrowers they could not receive the 180 days of forbearance the law entitled them to, told others they were ineligible entirely, and demanded more detailed hardship documentation than the law required.²

The Bureau also found that Carrington charged late fees on accounts that were supposed to be paused under forbearance, sent notices telling borrowers they “would be assessed” or “had been assessed” such charges, and reported inaccurate forbearance information to Equifax, Experian, and TransUnion. The CFPB concluded these practices violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, and Regulation V.¹

The consent order required Carrington to pay a $5.25 million civil penalty to the Bureau’s victims relief fund, audit its records to identify every borrower improperly charged late fees during forbearance and issue refunds, correct the inaccurate credit-bureau reporting, retrain staff on CARES Act requirements, and adopt new policies to prevent the same problems.³ Carrington did not admit or deny the findings, called the action “regulatory overreach,” and said it signed to avoid prolonged litigation.²

The CFPB terminated the consent order on July 21, 2025, finding that Carrington had paid the penalty in full and completed the consumer refund process. The Bureau waived any alleged non-compliance during the order’s duration.⁴

The $18.2 Million Pay-to-Pay Fee Class Settlement

A separate line of class actions attacked Carrington’s practice of charging borrowers each time they made a mortgage payment by phone or online. The lead case, Alexander v. Carrington Mortgage Services, LLC, was filed in the U.S. District Court for the District of Maryland and consolidated with Thomas-Lawson v. Carrington and Dawkins v. Carrington from California and Florida.⁵ Plaintiffs alleged Carrington charged fees ranging from $5 to $20 per payment that were not authorized by their mortgage agreements or HUD guidelines.⁶

In January 2022, the Fourth Circuit ruled that mortgage servicers charging convenience fees can be liable under the Maryland Consumer Debt Collection Act, and rejected Carrington’s argument that borrowers had consented through clickwrap agreements at the time of payment.⁷ That decision cleared the way for settlement.

Judge Richard D. Bennett granted final approval on November 10, 2022. The fund totaled $18,181,898.95, or 35% of the convenience fees Carrington collected from class members between January 1, 2016, and December 31, 2021. Payments went out automatically with no claim form required. Eligible class members were borrowers who paid a phone, IVR, or online payment fee during that window and who fell into one of three groups: property in California, Florida, Maryland, New York, or Texas; a loan Carrington acquired while at least 30 days delinquent; or an FHA-insured mortgage. The settlement also barred Carrington from charging pay-to-pay fees for three years.⁵

Lender-Placed Insurance Settlement

Carrington also faced litigation over lender-placed insurance, the coverage a servicer buys on behalf of borrowers whose own policies lapse, typically at much higher premiums. In Strickland v. Carrington Mortgage Services, LLC (Case No. 1:16-cv-25237, S.D. Fla.), filed in December 2016, plaintiffs alleged Carrington and several insurers ran a kickback scheme that inflated force-placed insurance premiums charged to borrowers.⁸ A related case, Santos v. The Carrington Companies, was filed in the District of New Jersey.

The consolidated settlement provided more than $8.3 million in monetary relief. Class members received 12.5% of the net premium on force-placed policies issued during the class period, and the defendants accepted a five-year restriction on their lender-placed insurance practices, including limits on certain commissions and reinsurance arrangements.⁹ The claims deadline passed in March 2018, and the settlement is closed.

HUD Inspector General Audit of FHA Foreclosures

A January 2025 audit by the HUD Office of Inspector General reviewed Carrington’s 2022 foreclosure activity on FHA-insured loans and concluded the company failed to complete required loss mitigation steps before initiating or continuing foreclosure on an estimated 18.15% of cases. The OIG projected that share to roughly 1,451 loans with an unpaid balance of about $204.8 million.¹⁰

The OIG recommended that HUD require Carrington to correct the 27 specific problem loans identified in the sample, review all loans affected by system errors, update its policies for evaluating foreclosure alternatives, and tighten internal controls. Carrington disagreed with the findings in an October 2024 response, calling the OIG’s statistical projection “highly misleading” and arguing the post-COVID environment made loan-by-loan comparisons difficult. As of the report’s publication, HUD had not issued a management decision.¹⁰

AARP Reverse Mortgage Class Action

In January 2026, the AARP Foundation filed a class action in the Eastern District of New York, Rizzati et al. v. Compu-Link Corporation et al. (Case No. 2:26-cv-00277), naming Carrington, Celink, and Finance of America Reverse. The complaint alleges the defendants charged older homeowners with Home Equity Conversion Mortgages fees that were not permitted under their contracts or HUD rules, then compounded the harm by calculating interest and mortgage insurance premiums on the inflated balances.¹¹

The disputed charges fall into four categories: attorney’s fees, property inspection fees, property preservation fees, and appraisal fees. One named plaintiff was billed more than $14,000 in attorney’s fees and another $17,000, well above HUD’s $725 cap on foreclosure attorney’s fees in New York. The suit seeks reimbursement or credit reversal for a nationwide class of HECM borrowers charged since 2012.¹²

Carrington is no longer a defendant. It was voluntarily dismissed from the suit in May 2026, and Finance of America Reverse was dismissed in March 2026. Celink remains the sole defendant, with initial discovery underway as of mid-2026.¹³

Ohio Attorney General Loan Modification Agreement

State regulators have also gone after Carrington. In 2009, the Ohio Attorney General and the Ohio Department of Commerce sued Carrington over its loan modification practices. The matter resolved in May 2011 through an Assurance of Voluntary Compliance. Under it, Carrington had to assign a single point of contact to each borrower applying for a modification, follow specific processing timelines, suspend foreclosure while a modification application was pending, and create an internal review process for denied modifications. Carrington also agreed to provide modifications or other relief to 29 Ohio homeowners whose loans it had acquired servicing rights for in 2007 and who had not yet received help. The company did not admit wrongdoing.¹⁴

Individual Borrower Suits Have Fared Worse

Class actions and regulators have driven most of the recoveries against Carrington. Individual borrower suits have generally not. In Aspan v. Carrington Mortgage Services (5th Cir. 2024), a Texas homeowner alleged breach of contract, negligence, fraud, unjust enrichment, and violations of the Texas Debt Collection Act and Texas Deceptive Trade Practices Act, claiming Carrington misapplied her payments, kept her account in default, and collected unauthorized fees. The Fifth Circuit affirmed summary judgment for Carrington on every count, holding that Aspan had been in default from 2014 to 2019 and therefore could not sue for breach of contract under Texas law, that the economic-loss rule barred her tort claims, and that her evidence on the statutory claims was too vague to create a factual dispute.¹⁵ Borrowers considering individual litigation should expect Carrington to contest default status, payment history, and the sufficiency of the evidence closely.

1
Consumer Financial Protection Bureau. Carrington Mortgage Services, LLC Enforcement Action
2
National Mortgage Professional. CFPB Fines Carrington Mortgage $5.25M for Cheating Homeowners
3
Consumer Financial Protection Bureau. Carrington Mortgage Services Consent Order
4
Consumer Financial Protection Bureau. Carrington Mortgage Services Termination of Consent Order
5
Tycko & Zavareei LLP. Final Approval Secured in Carrington Mortgage Settlement Ending Pay-to-Pay Fees for Borrowers
6
ClassAction.org. Dawkins v. Carrington Mortgage Services Complaint
7
United States Court of Appeals for the Fourth Circuit. Alexander v. Carrington Mortgage Services, LLC Opinion
8
Law.com. Strickland v. Carrington Mortgage Services Class Action Complaint
9
District of Columbia Department of Insurance, Securities and Banking. Santos v. The Carrington Companies Brief in Support of Motion for Preliminary Approval
10
HUD Office of Inspector General. Carrington Mortgage Services FHA Audit Report 2025-KC-1002
11
AARP. New Class Action Lawsuit Alleges Reverse Mortgage Companies Charged Illegal Fees to Older Homeowners
12
National Mortgage News. AARP Sues Celink, Carrington, Finance of America Over HECMs
13
PACER Monitor. Rizzati et al v. CompuLink Corporation et al
14
Ohio Attorney General. Attorney General DeWine and Ohio Department of Commerce Announce Agreement With Carrington Mortgage
15
United States Court of Appeals for the Fifth Circuit. Aspan v. Carrington Mortgage Services Opinion