Lending Servicing

Ditech Financial fined $1.4 million for "abusive debt collection practices" in Massachusetts

Accused of making "excessive" debt collection phone calls

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Ditech Financial will pay $1.4 million to the state of Massachusetts to settle charges that the company engaged in “abusive debt collection practices” by excessively calling borrowers to collect payment as well as not property notifying some borrowers of their mortgage information, the state’s attorney general announced this week.

According to the announcement from Massachusetts Attorney General Maura Healey, Ditech Financial, formerly known as Green Tree Servicing, agreed to an “assurance of discontinuance,” which requires Ditech to stop making “excessive debt collection calls” to consumers.

The order also requires Ditect to provide written notice regarding the borrowers’ right to receive detailed information about any debts that Ditech sought to collect, both of which are required by state law.

The order settles claims uncovered by an investigation by Healey’s office into Ditech’s debt collection practices in the state.

Healey’s office alleged that since 2012, Ditech “routinely violated” the state’s laws.

According to Healey’s office, Ditech employees allegedly called borrowers far more often on a daily basis than allowed by state law excess of the number of calls permitted by state law. In some cases, Ditech allegedly called the same borrower as many as 12 times in a single day.

The AG’s Office also found that Ditech failed to notify borrowers of their right to seek detailed information regarding their mortgage debt.

Under Massachusetts 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.

This is obviously significant considering how often some mortgage loans are transferred from servicer to servicer.

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, Healey’s office said.

Under the terms of the settlement, Ditech agreed to change its procedures to prohibit calls in excess of the number permitted by the debt collection regulations and will implement technological controls to restrict outgoing collection calls when the call limit is reached.

Ditech will also ensure that all borrower accounts receive timely and compliant debt validation notices going forward, Healey’s office said.

According to Healey’s office, the payment of $1.4 million from Ditech will be used to address the “negative effects of foreclosure, debt collection or other consumer protection issues” in the state.

“Our state laws protect borrowers from being harassed and threatened by debt collectors,” Healey said. “This settlement is a message to all debt collectors that our office will continue to aggressively pursue those who engage in abusive collection practices in Massachusetts.”

In a statement, Ditech said that it voluntarily entered into the settlement agreement is “pleased to bring closure” to this issue.

“Ditech takes very seriously the Attorney General’s concerns and the requirements of Massachusetts laws,” the company said in a statement. 

“The company has previously taken action to address the concerns expressed by the Attorney General,” Ditech continued. “Ditech values its relationship with the Attorney General’s Office and remains committed to providing excellent service to its Massachusetts customers.”

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