CFPB Fines Mortgage Servicer For Improperly Handling MSR Transfers

Posted by Patrick Barnard on July 31, 2015 No Comments
Categories : Mortgage Servicing

Residential Credit Solutions Inc. has agreed to pay $1.5 million in restitution and a $100,000 fine for allegedly blocking consumers' attempts to save their homes from foreclosure, the Consumer Financial Protection Bureau (CFPB) reports.

The bureau alleges that from 2009 to 2013 the mortgage servicer failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they weren't, sent consumers escrow statements falsely claiming they were due a refund, and forced consumers to waive their rights in order to get a repayment plan.

‘By failing to honor loan modifications already in place, Residential Credit Solutions put consumers through more headaches but in some cases cost consumers their homes,’ says Richard Cordray, director for the CFPB, in a press release. ‘Residential Credit Solutions must now compensate its victims $1.5 million as a result of our action.’

The bureau says the Fort Worth, Texas-based servicer failed to honor trial loan modifications that consumers had entered into with their prior servicers, after the mortgage servicing rights (MSRs) to their loans had been transferred to Residential Credit Solutions. Instead, the company insisted that consumers re-prove that they qualified.

This effectively set consumers back as though they had not received a trial modification. It also prolonged many people's loss mitigation plans.

By putting consumers in ‘loan modification trial period purgatory’ and confusing them about the status of their modifications, Residential Credit Solutions made it difficult for consumers to take appropriate action. In many cases, the company delayed or deprived borrowers of the opportunity to save or sell their homes, the bureau says in its release.

Since 2009, approximately 75,000 borrowers have had their loans transferred to Residential Credit Solutions, however, the release does not say how many borrowers were directly affected by the company's questionable business practices.

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