A mortgage servicer has agreed to pay $2 million and overhaul its business practices to resolve allegations that it violated Massachusetts foreclosure prevention, debt collection, and consumer protection laws, according to an announcement from Attorney General Andrea Joy Campbell.
The big picture: Cypress Loan Servicing LLC, formerly known as Rushmore Loan Management Services, was accused of unlawfully putting financially distressed homeowners at risk of foreclosure and engaging in improper debt collection practices. The settlement includes restitution for impacted consumers, business practice reforms, and long-term compliance monitoring.
Why it matters:While Cypress no longer directly services loans, it retains the option to reenter the space or subcontract to subservicers, a detail that significantly broadens the settlement’s future reach.
Key allegations:
- The AG’s office alleged that Cypress routinely failed to comply with Section 35B of Massachusetts law, which mandates servicers make good-faith efforts to help struggling borrowers avoid foreclosure. This included:
- Failing to respond to loan modification applications on time.
- Failing to send required missing document notices.
- Requiring unaffordable down payments before granting modifications.
- Omitting crucial disclosures in modification denials — including affordability analyses and borrower obligations.
- The company was also accused of:
- Exceeding the state’s legal limit of two collection calls per week in thousands of instances.
- Failing to send required debt validation notices within five days of initiating debt collection efforts.
Settlement terms:
- $2 Million Payment: To be used at the AG’s discretion for restitution, state funds, or consumer protection initiatives.
- Business Practice Reforms:
- Monitor and ensure subservicer compliance with Massachusetts law.
- Avoid up-front payments as a condition for modifications.
- Implement policies to limit call frequency and ensure timely delivery of debt validation notices.
- Ongoing Oversight:
- Submit regular monitoring reports to the AG’s office for the next three years.
- Provide detailed data if it resumes direct servicing within five years.
