Nationwide mortgage servicing company Green Tree will pay $63 million to settle allegations that it mistreated mortgage holders, federal authorities revealed this week.
According to a statement on the Consumer Financial Protection Bureau’s website, “The mortgage servicer failed to honor modifications for loans transferred from other servicers, demanded payments before providing loss mitigation options, delayed decisions on short sales, and harassed and threatened overdue borrowers.” Further, Green Tree was accused of misleading consumers about their monthly payments, harassing them if they were as little as one day late and forcing them to making payments using a pricey “Speedpay” system. The firm will return $48 million to consumers and pay a $15 million civil penalty; it admitted no wrongdoing.
“Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners,” said CFPB Director Richard Cordray. “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.”
Green Tree, based in St. Paul, Minn., has rapidly expanded into the residential mortgage market and services loans for millions of homeowners, in part by buying the rights to service loans from other servicers. The firm was accused of failing to honor mortgage modifications that had been granted to homeowners after it acquired the loans from other financial institutions.
“It’s against the law for a loan servicer to lie about the debts people owe, or threaten and harass people about their debts,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Working together, the FTC and CFPB are holding Green Tree responsible for mistreating homeowners, including people in financial distress.”
Green Tree did not immediately respond to a request for comment from Credit.com. According to the Minneapolis Star Tribune, the firm said it is developing and deploying “best practices.”
“We believe this resolution is in the best interest of Green Tree, our consumers, our clients and our shareholders,” CEO Mark J. O’Brien of Walter Investment, Green Tree’s parent company, told the newspaper. “We … continue to be committed to properly serving homeowners and helping them remain in their homes.”
The CFPB and FTC alleged that:
- In numerous instances, Green Tree took two to six months to respond to consumer requests for short sales. This could have cost consumers potential buyers, and it may also have cost them other loss mitigation alternatives while their short sale requests were pending.
- If a consumer was two weeks or more past due, Green Tree consumers could receive seven to 20 phone calls a day, some starting as early as 5 a.m. or continuing until as late as 11 p.m. The collectors didn’t limit themselves to home phones, calling some people at work. Some Green Tree representatives also told consumers that nonpayment of their mortgage loan could result in arrest or imprisonment. Or, representatives threatened seizure or garnishment of the consumer’s wages when Green Tree had no intention to take such actions. Such threats are illegal.
- Green Tree deceived consumers to get them to pay $12 for its pay-by-phone service, called Speedpay. Green Tree representatives would pressure consumers to use the service by telling consumers that Speedpay was the only available payment method to ensure the payment would be received on time. In fact, Green Tree accepted other payment methods that do not involve a fee, such as checks and ACH payments. Green Tree also made payments from consumers’ bank accounts without their authorization. For example, homeowners who gave Green Tree their account numbers to set up a one-time payment through Speedpay later discovered the company had used the information to arrange for additional payments without their consent.
- Green Tree furnished consumers’ credit information to consumer reporting agencies when it knew, or had reasonable cause to believe, that the information was inaccurate, and failed to correct the information after determining that it was incomplete or inaccurate. (Consumers are entitled to free copies of their credit report every year from each of the major credit reporting agencies to ensure that they are accurate.)
- Green Tree told consumers they owed fees they did not owe, or that they had to make higher monthly payments than their mortgage contracts required.
The order would also require Green Tree to end the alleged mortgage servicing violations, honor the prior loss mitigation agreements, take efforts to help homeowners preserve their home and provide quality customer service, according to the release.
More on Managing Debt:
- How to Pay Off Credit Card Debt
- 5 Tips for Consolidating Credit Card Debt
- Top 10 Debt Collection Rights