[1]The Consumer Financial Protection Bureau (CFPB [2]) and the Federal Trade Commission (FTC [3]) penalized national mortgage servicing company Green Tree Loan Servicing [4] for allegedly mistreating borrowers attempting to avoid foreclosure on their homes, according to a joint announcement [5] from the CFPB and FTC on Tuesday.
For the alleged servicing violations, Minnesota-based Green Tree agreed to pay a total of $63 million, which breaks down to $48 million in redress to victims and an additional $15 million civil penalty.
The CFPB and FTC claim that Green Tree engaged in illegal practices such as failing to honor loan modifications on mortgages that were transferred from other servicers, demanding payments from borrowers facing foreclosure before providing them with loss mitigation options, delaying decisions on short sales, harassing and threatening borrowers who were overdue on their payments, and using deceptive tactics to charge consumers with "convenience fees," such as telling consumers that its pay-by-phone Speedpay service was the only available payment method and then charging them $12 to make a payment via Speedpay.
The agencies allege that Green Tree consumers could receive anywhere from seven to 20 phone calls per day for falling two weeks or more behind on payments, and also that Green Tree employees threatened overdue borrowers with wage garnishing, arrest, and even imprisonment without having any intention of enforcing such actions.
“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” CFPB Director Richard Cordray said. “When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct.”
Representatives from Green Tree were not immediately available for comment when contacted by DS News.
In addition to paying the redress to victims and the civil penalty, Green Tree must actively engage in assisting borrowers with avoiding foreclosure and preserving their homes by reaching out via telephone, mail, and translation services to offer loss mitigations to borrowers; end all mortgage servicing violations; adhere to a rigorous set of servicing requirements; honor all loss mitigation agreements made with prior servicers; and provide their consumers with quality customer service, which includes making sure a loss mitigation or other appropriate supervisor is available when a consumer requests it and making sure consumers have access to individuals who are able to stop foreclosure proceedings.
Click here [6] to see a copy of the complaint, or click here [7] to see a copy of the proposed consent order.