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Mortgage

CFPB orders Specialized Loan Servicing to pay $1.5 million for foreclosure issues

SLS accused of dual tracking struggling borrowers

Specialized Loan Servicing will pay more than $1.5 million as part of a settlement with the Consumer Financial Protection Bureau, which accused SLS of “taking prohibited foreclosure actions against mortgage borrowers who were entitled to protection from foreclosure” and other actions.

According to the CFPB, SLS violated both the Real Estate Settlement Procedures Act and the CFPB’s mortgage servicing rules by pursuing foreclosure on a number of borrowers despite the fact that they’d already requested other loss mitigation options, a process known as “dual tracking.”

The CFPB’s servicing rules, which took effect in 2014, prohibit servicers from starting the foreclosure process after a struggling borrower submits their loss mitigation application.

And according to the CFPB, SLS did not always abide by this rule.

“Since January 10, 2014, Respondent made First Filings, moved for foreclosure judgment or an order of sale, and conducted foreclosure sales in certain instances where the borrower was entitled to protection from these actions,” the CFPB said in its consent order.

“In some cases, SLS’s violations of Regulation X short-circuited the protections against foreclosure for consumers whose homes were ultimately foreclosed upon,” the CFPB added.

According to the CFPB, SLS also violated federal law by “failing to send or to timely send evaluation notices to mortgage borrowers who were entitled to them.”

In a release, the CFPB said that these actions violate the Consumer Financial Protection Act of 2010.

Under the terms of the settlement, SLS will pay $775,000 in restitution to affected consumers. SLS is also required to pay a $250,000 civil money penalty to the CFPB, and will waive $500,000 in borrower deficiencies.

In a statement, SLS said that the issues were limited, adding that the company settled the charges to bring the situation to an end.

“SLS is pleased to have resolved this issue, which dates back to our initial interpretation and implementation of the Consumer Financial Protection Bureau’s 2014 Servicing Rules and which affected a limited number of borrowers,” a spokesperson for Computershare Loan Services said in a statement provided to HousingWire.

Australian tech company Computershare is the parent company of SLS, having acquired the company in 2011.

“We welcome this resolution so that we can put this matter behind us and move forward with our mission to help our borrowers and clients during this difficult time,” the Computershare spokesperson added.

Beyond the monetary punishments, the settlement also requires SLS to “implement policies and procedures that will ensure that borrowers receive the protections from foreclosure to which they are entitled under RESPA and Regulation X, including preventing SLS from improperly making first filings, from improperly moving for foreclosure judgments or orders of sale, and from conducting foreclosure sales against borrowers who have submitted timely and facially complete or complete loss-mitigation applications.”

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