Green Tree To Pay $63 Million In Penalties For Mortgage Servicing Failures

Posted by Patrick Barnard on April 22, 2015 No Comments
Categories : Mortgage Servicing

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission have ordered Green Tree Mortgage Servicing to pay $48 million in borrower restitution and $15 million in penalties to settle allegations of alleged servicing failures that occurred from 2010 to 2014.

Specifically, the regulators allege that Green Tree 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.

Green Tree, which specializes in servicing delinquent loans and markets itself as a ‘high touch’ servicer, failed to honor loan modifications that consumers had entered with their prior servicers and insisted that the consumer pay their original, higher monthly payment, the CFPB alleges.

The company is also accused of failing to get the information and documentation from the prior servicer needed to accurately collect payments from consumers.

The CFPB says the special servicer resorted to illegal practices to collect mortgage payments from consumers who fell behind on their loans, including false threats, repeated calls, and revealing debts to third parties, such as employers.

This included demanding payments from consumers who had previously been approved for modifications under the federal government's Home Affordable Modification Program, which does not require consumers to make payments while they are being considered for the program.

The CFPB also alleges that Green Tree dragged its feet when it came to handling short sales. The complaint says the company, in numerous instances, took two to six months to respond to consumer requests for short sales.

The regulators further accuse Green Tree of harassing consumers by way of its collection techniques: Specifically, the firm is accused of calling some borrowers as many as 20 times a day. Further, it is alleged that some of the company's representatives told consumers that nonpayment could result in arrest or imprisonment. Some representatives also threatened seizure or garnishment of the consumer's wages, the CFPB says in a release.

The servicer is also accused of steering consumers into using its Speedpay pay-by-phone service, for which consumers were charged $12, when, in fact, consumers could have used other payment services that do not charge fees in order to make payments to Green Tree.

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