Massachusetts Attorney General Andrea Joy Campbell has announced a $4.65 million settlement with Newrez LLC, the successor by merger to Specialized Loan Servicing, resolving allegations that the company engaged in unfair and deceptive mortgage servicing and debt collection practices that placed thousands of borrowers at heightened risk of foreclosure.
The Attorney General’s Office said SLS serviced nearly 24,000 residential mortgage loans in Massachusetts and violated a range of state laws, including the mortgage right-to-cure statute, foreclosure prevention statutes, the Attorney General’s debt collection regulations, and the state’s COVID-19 foreclosure and eviction moratorium.
Under the Assurance of Discontinuance, Newrez will:
- Pay $4.65 million, which will fund restitution and other remedies.
- Implement extensive servicing reforms, including revised notices, enhanced loss-mitigation procedures, limits on collection communications, and new compliance systems.
- Provide regular reporting to the AG;s office for up to three years, covering foreclosure activity, loss-mitigation reviews, and account-level remediation.
- Identify and provide relief to consumers affected by alleged violations during the COVID-19 forbearance period, including fee waivers, negative credit reporting corrections, account credits, and deferments.
The investigation, summarized in the 28-page Assurance of Discontinuance, asserts that SLS:
- Sent 33-day right-to-cure notices instead of the legally required 90-day notices, and in some instances sent shortened notices before the original period expired.
- Failed to comply with loan-modification requirements including not issuing required notices, not timely reviewing applications, not sending missing-document letters, failing to provide written assessments, and not taking reasonable steps to avoid foreclosure.
- Required up-front payments as a condition of receiving a modification, contrary to law.
- Exceeded limits on collection calls and failed to send required debt validation notices.
- Misrepresented and mishandled COVID-19 forbearance rights, including failing to inform borrowers that forborne amounts should automatically be deferred to the end of the loan term.
