Shellpoint Mortgage Servicing will provide Massachusetts homeowners with $3.5 million in principal reductions as part of a settlement with the state for allegedly violating Massachusetts foreclosure laws and “failing to help homeowners avoid foreclosure.”
The settlement stems from allegations that Shellpoint violated the Massachusetts Act Preventing Unlawful and Unnecessary Foreclosures, which is designed to protect borrowers from foreclosure and requires mortgage servicers to make a “good faith effort” to avoid foreclosure for borrowers whose loans have “unfair” subprime interest rates.
Under the terms of the settlement, which was announced last week by Massachusetts Attorney General Maura Healey, Shellpoint is required to provide a total of $3.5 million in principal reduction through a loan modification program and waiving shortfalls when borrowers sell their homes for less than they owe.
Shellpoint is also required to make a $450,000 payment to the state.
According to Healey’s office, an investigation into Shellpoint was launched after the AG received complaints from Massachusetts borrowers who said that they had significant difficulty in dealing with Shellpoint, including issues when applying for a loan modification while facing foreclosure.
The investigation revealed that Shellpoint “failed to ensure a single point of contact for borrowers; that it mishandled calls from borrowers with limited English language capacity; that it created unnecessary difficulties for homeowners after a divorce or the death of a co-borrower; and that it mishandled mortgage loans transferred from other servicing companies,” Healey’s office said.
The investigation also found that Shellpoint did not “provide a timely and efficient loan modification review for eligible borrowers,” as the company is required to do by Massachusetts state law.
Shellpoint is a subsidiary of Shellpoint Partners, which is also the parent company of mortgage lender New Penn Financial, title and settlement services provider Avenue 365, and eStreet, an appraisal management company. Shellpoint Partners was recently acquired by New Residential for $190 million.
Healey’s office alleged that Shellpoint violated the Massachusetts Consumer Protection Act.
As part of the settlement, Shellpoint agreed to make “major business practice changes to address these deficiencies,” Healey’s office said, adding that Shellpoint was “responsive” to her office during the course of the investigation.
“This settlement will put money back into the pockets of homeowners who were harmed and will ensure Shellpoint amends its practices and complies with the law,” Healey said in a statement. “We are committed to making sure Massachusetts residents are able to stay in their homes, particularly when their mortgages and loans have been mishandled by companies like this one.”
In a statement provided to HousingWire, Shellpoint said that it is “pleased” to reach the agreement with Massachusetts.
“Shellpoint Mortgage Servicing is pleased that this matter is resolved after a long and collaborative review process with the Massachusetts Attorney General’s Office,” the company said. “SMS has been and remains committed to helping homeowners in Massachusetts and throughout the country. Over the last five years, we have helped more than 32,000 homeowners avoid foreclosure and we are committed to providing the highest possible level of service to every homeowner.”