Recently, the Massachusetts AG
settled with a loan servicer (respondent) to resolve allegations that respondent violated Massachusetts foreclosure-prevention law, debt collection regulations, and federal mortgage servicing rules. The AG alleged that respondent, which primarily engages in the servicing and resolution of nonperforming residential mortgage loans, failed to provide timely notices to borrowers, delayed communication allowing large unpaid balances to accrue, and unlawfully charged up-front payments for mortgage modifications. Additionally, respondent was accused of engaging in collection activities on time-barred debts without required disclosures, violating state regulations by excessively calling borrowers and failing to provide required notices. The company also allegedly failed to send required periodic statements to borrowers, violating federal regulations.
According to the settlement, in addition to paying $300,000 to Massachusetts, which may be used for consumer restitution, the respondent must release all liens associated with the underlying portfolio at issue at no expense to the consumer, must request the deletion of related tradelines from credit reports, and is prohibited from undertaking any collection activity on such accounts or assigning or transferring any right to collect payment on such accounts, among other things. Respondent agreed that for future accounts, it will not engage in collection activities on time-barred debts and will comply with applicable laws and regulations. Respondent will also assign a Single Point of Contact to all delinquent borrowers to answer borrowers’ questions and communicate deadlines.
