Mass AG secures $ 1 million from company that mismanaged home loan modifications – Framingham SOURCE
The following is a press release from the Massachusetts Attorney General’s Office.
BOSTON – A national mortgage services company will provide nearly $ 1 million in assistance to Massachusetts residents to resolve allegations it has blocked homeowners from trying to get loan modifications to avoid foreclosure, announced today, February 16, Attorney General Maura Healey.
In the disclaimer insurance filed with Suffolk Superior Court, Kyanite Services, Inc., the former parent company of third-party mortgage service Seterus, Inc., will award $ 975,000 in relief to approximately 180 Massachusetts borrowers for their providing inaccurate and late information regarding their loan modification requests. Seterus is no longer in business.
“When families who were struggling to pay off their mortgages requested a loan modification, this company gave them the green light,” said AG Healey. “This settlement brings relief to borrowers who have been wronged and ensures that the company is answerable for its abusive conduct.”
GA office alleges Seterus raped Massachusetts Law preventing illegal and unnecessary seizures – known as “35B” – a landmark law passed in 2012 that requires creditors to take reasonable steps and make a good faith effort to avoid foreclosure on certain mortgages. The AG’s office also alleges that Seterus violated Massachusetts consumer protection law by providing borrowers with false and misleading information about the status of their loan modification requests.
The AG’s office opened an investigation into Seterus after receiving complaints from consumers in Massachusetts that they had encountered significant problems requesting loan modifications.
The investigation found that Seterus regularly sent notices to borrowers that their loan modification requests were complete only to inform them later that additional documents were needed. This cycle would often repeat itself several times, resulting in the application process taking years instead of months, if at all. Although it sometimes took Seterus nearly a month to identify the missing documents, Seterus then only gave borrowers eight days to submit the additional items before rejecting the borrower’s requests as incomplete. In some cases, Seterus informed borrowers that they had more time, but then refused those borrowers before the expiration of the time period stated in Seterus’ written notice.
The AG’s investigation also found that during those times when borrowers’ applications were complete or only certain items were missing, Seterus sent notices to borrowers advising borrowers to submit entirely new applications or request a sale to discovered or an act in lieu of foreclosure. These solicitations wrongly criticized borrowers for not working with Seterus, while Seterus’ own practices caused significant delays and frustration in the loan modification review process.
The investigation also found that some borrowers returned mortgage modification options (MMOs) asking for a modification and suffered the same delays and denials. In addition, Seterus did not provide borrowers with the written assessment required by law. The requirement of a written appraisal is essential to provide the borrower with Seterus’ calculation of the borrower’s income, debts and obligations and the analysis of the net present value of the foreclosure versus the change.
In 2019, Kyanite sold Seterus to Nationstar Mortgage (d / b / a as Mr. Cooper). As part of an agreement with the GA office, Nationstar had previously agreed to implement its own 35B compliant loan modification program.
The Seterus case is part of the Attorney General’s office investigation into the mortgage services industry and its compliance with Law preventing illegal and unnecessary seizures. AG Healey is committed to ensuring that all mortgage agents respect the rights of homeowners under this important state law.
The GA office has been a national leader in securing restitution and other relief for borrowers from banks and utilities. The office secured recoveries and other relief from Morgan stanley, Goldman Sachs, Royal Bank of Scotland, Citigroup, JPMorgan Chase, In all the countries, Fremont investment and loan, First option, HSBC, Ditech, Shellpoint Mortgage Services, Caliber home loans, PHH and others on behalf of the Massachusetts owners.
Consumers who have questions or concerns about deceptive or abusive loan foreclosure and management practices can call the Attorney General’s hotline at 617-727-8400 or file a complaint with the office.
This case was handled by Deputy Attorney General Michael Lecaroz, AG Healey’s Consumer Protection Division, with assistance from Deputy Attorney General Andrew Haile, currently AG’s Administrative Law Division.