Wednesday, October 12, 2016

Different Company Name, Same BS; Loan Servicer To Cough Up $1.4 Million To Settle State AG's Lawsuit Alleging It Called Overdue Borrowers More Than Twice/Week, Failing To Verify Debts Before Commencing Foreclosure, Both In Violation Of Massachusetts Law

In Boston, Massachusetts, The Boston Globe reports:
  • Following a series of debt collection lawsuits and settlements, including one announced [last month] by Attorney General Maura Healey, consumer advocates are calling for tighter state regulations over the industry.

    On Wednesday [Sept. 28], Healey’s office announced that a Florida mortgage company agreed to pay the state $1.4 million to settle allegations it violated Massachusetts debt collection laws, including calling overdue borrowers as many as 12 times a day.

    Ditech Financial LLC tried to collect on more than 5,000 delinquent Massachusetts mortgage accounts since 2012 using tactics that violated state law, including calling borrowers as many as 12 times a day, Healey said.
    “It is big-volume business right now,” said Margaret Miley, an adviser for the Midas Collaborative, an Allston-based network of community groups. “There needs to be more done to regulate this growing industry.”

    Healey’s office and officials with the Division of Banks are debating whether to further regulate the industry and held their first hearing on the issue earlier this month.

    Healey’s settlement with Ditech will probably fuel that discussion.

    Healey described Ditech’s practices as “abusive” and said the company’s calls to borrowers exceeded the two calls a week allowed by state law.

    Homeowners also went into foreclosure without receiving the appropriate and timely information about their debt, Healey alleged.(1)
    Ditech, which used to be known as Green Tree Servicing LLC, was not immediately available for comment. Green Tree had its own share of regulatory problems. In April 2015, Green Tree paid $63 million in fines and restitution after the federal Consumer Financial Protection Agency and the Federal Trade Commission said the company failed to honor prior loan modifications, demanded payments before notifying borrowers of their options, and made false threats and repeated calls to borrowers who had fallen behind.
For the story, see Advocates seek more limits on debt collectors.
(1) According to the Massachusetts Attorney General's office:
  • [T]he AG’s Office also found that Ditech failed to notify borrowers of their right to seek detailed information regarding their mortgage debt. Under state law, mortgage borrowers have the right to verify the amounts owed on a debt in collection and to confirm that the party seeking to collect on the debt has the legal right to do so.

    Particularly where mortgage loans are frequently transferred from servicer to servicer and sold from party to party, state law protects the rights of consumers to access information relating to their debt. Ditech’s alleged failure to issue required debt validation notices deprived consumers of their rights and their opportunity to seek information regarding their own mortgage loans.
See National Company Pays $1.4 Million, Strengthens Policies over Abusive Debt Collection Practices (Conduct Allegedly Affected More than 5,000 Accounts in Massachusetts; Allegations Include Making High Volume Collection Calls, Failure to Provide Debt Validation Notices).

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