Mortgage Related

Mortgage Company Settles With CFPB Over Accidental Foreclosures

Written by Steve Rhode

Today the Consumer Financial Protection Bureau (Bureau) settled with Specialized Loan Servicing, LLC (SLS), a mortgage-loan servicer in Colorado. As of February 29, 2020, SLS serviced a portfolio of mortgage loans worth about $112.69 billion. The consent order requires SLS to pay $1.275 million in monetary relief to consumers in the form of redress and waiver of borrower deficiencies, pay a $250,000 civil money penalty, which will be paid to the Bureau and deposited into the Bureau’s Civil Penalty Fund, and implement procedures to ensure compliance with the Real Estate Settlement Procedures Act (RESPA) and its implementing regulation, Regulation X.

The Bureau’s investigation found that since January 2014, SLS violated RESPA and Regulation X by taking prohibited foreclosure actions against mortgage borrowers who were entitled to protection from foreclosure, and by failing to send or to timely send evaluation notices to mortgage borrowers who were entitled to them. These violations also constitute violations of the Consumer Financial Protection Act of 2010. In some cases, SLS’s violations of Regulation X short-circuited the protections against foreclosure for consumers whose homes were ultimately foreclosed upon.

Under the settlement, SLS will pay $775,000 in restitution to affected consumers according to a redress plan that the Bureau will approve. SLS will also pay a $250,000 civil money penalty to the Bureau, and will waive $500,000 in borrower deficiencies. The settlement requires SLS to implement policies and procedures that will ensure that borrowers receive the protections from foreclosure to which they are entitled under RESPA and Regulation X, including preventing SLS from improperly making first filings, from improperly moving for foreclosure judgments or orders of sale, and from conducting foreclosure sales against borrowers who have submitted timely and facially complete or complete loss-mitigation applications. SLS must also monitor its foreclosure activity to ensure that it complies with the policies and procedures that it must implement.

A copy of the consent order filed with the Bureau is available here.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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