this Consumer Financial Protection Bureau The Consumer Protection Bureau (CFPB) on Tuesday announced a series of enforcement actions against two companies for what it described as “illegal activity that harms elderly homeowners and causes them to fear losing their homes.”
These actions were directed at Pittsford, N.Y. sutherland global and Landover, MD. Noward Management Consultingrepresentatives together formed the Home Equity Conversion Mortgage (HECM) servicing business U.S. Department of Housing and Urban Development (heads-up display).
NOVAD holds the HUD HECM allocated loan servicing contract from 2014 to 2022 and is working with Sutherland to form the HECM loan servicing business on behalf of HUD. But the bureau claims the companies are not adequately staffed to handle as many as 150,000 borrowers annually, which the government claims leads to neglect (and fear) of the senior borrowers they contract to service.
“This resulted in the system being unable to respond to thousands of homeowners’ requests for assistance and causing financial harm to borrowers, including lost home sales and unnecessary fees,” the bureau explained.
The bureau said that under federal law, mortgage servicers are required to respond promptly to consumers, a requirement that is even more important for reverse mortgage borrowers.
“This requirement is important to protect reverse mortgage borrowers, who will still be required to pay property taxes, insurance and other applicable fees and assessments,” the CFPB said. “However, many borrowers are unable to get one from anyone at their loan servicer. Contact. In fact, these companies systematically failed to respond to thousands of homeowners’ requests for loan payment schedules, short sales, deeds in lieu of foreclosures, lien releases, and general information requests.
With a lack of response, the companies “let the problem fester to a breaking point,” including many borrowers who feared being displaced by foreclosure. These companies “hang[ed] The bureau said it “puts homeowners in a difficult position” by preventing HECM borrowers from meeting annual occupancy requirements, obtaining loan repayment schedules and finding alternatives to foreclosure.
The CFPB added that communications glitches also resulted in homeowners being incorrectly told they were in foreclosure when that was not the case.
“The companies sent false payment letters to elderly homeowners stating that their reverse mortgages were due and must be paid within 30 days due to a default condition, when no such triggering event occurred,” the CFPB explained. “The companies then inappropriately ignore reverse mortgage borrowers’ attempts to process and correct ‘due and payable’ letters.”
Enforcement order prohibits Sutherland Global and its subsidiaries Sutherland Government Solutions and sutherland mortgage services – and NOVAD from “engaging in reverse mortgage activity, impose strict compliance requirements on Sutherland Mortgage Services’ future reverse mortgage activity, require Sutherland to pay $11.5 million in restitution to affected consumers, and require all companies to The civil penalty payment of approximately $5 million will be deposited into the CFPB’s Victim Relief Fund.
However, NOVAD’s fine is capped at $1.
“This order requires NOVAD to pay $1 to the CFPB Victim Relief Fund due to NOVAD’s declared inability to pay,” the announcement states. “By requiring NOVAD to pay a penalty of at least $1, the CFPB can make consumers eligible for future benefits from CFPB Victim Relief Funds.” Relief Fund Gets Additional Relief.”
CFPB Director Rohit Chopra described the conduct that led to the enforcement order as stemming from a negligent attitude.
“Sutherland and NOVAD were unprepared to support the hundreds of thousands of elderly homeowners for whom the defendants were responsible for reverse mortgages,” Chopra said in a statement. “The defendants ignored complaints and requests for help and allowed the problem to snowball into a disaster. . Elderly homeowners failed to choose Sutherland and NOVAD as their reverse mortgage servicers, and the CFPB is pursuing these defendants for unlawful negligence.
Celink was awarded the HECM service contract in 2022.
house lineReverse Mortgage Daily (RMD) reached out to NOVAD, and a person who answered the phone said the company had no comment.
After this article was published, a Sutherland representative contacted RMD and provided a statement explaining that RMD has a voluntary agreement with the CFPB regarding work it performs as a NOVAD subcontractor.
“NOVAD is a prime contractor working with [HUD] Provides loan servicing support for reverse mortgages and other mortgages. Sutherland is engaged by NOVAD as a subcontractor to provide designated, limited support services.
“Under the subcontract, Sutherland is not directly responsible for the conduct of reverse mortgage loan servicing covered by the CFPB Agreement. HUD controls all aspects of reverse mortgage loan servicing and communicates only with NOVAD. Sutherland cannot directly deposit Get HUD Guides, HUD Services, Borrower Communications, or Borrower Files.
As a result, Sutherland “disagrees with the CFPB’s findings and denies the CFPB’s allegations.”
The company “agreed to sign the consent order despite NOVAD’s inability to pay,” Sutherland said, which was verified based on a review of NOVAD’s financial statements and the tax records of key executives.
The company added: “The resolution of this issue allows Sutherland to conclude this matter on the subcontract, which ends in 2022, so that it can focus on continuing to support customers through industry-leading innovation and the delivery of high-quality digital solutions. “
Reverse mortgage industry educator and Learn about reverse When RMD reached out to author Dan Hultquist, he offered his side of the story.
“Many reverse mortgage professionals take pride in their work. Some even credit it as a sector that has transformed the quality of retirement for homeowners and given them peace of mind in their old age,” he said. “So when a homeowner or his or her heirs have a negative experience with a reverse mortgage loan, it becomes more challenging to help other homeowners.
“NOVAD’s failure to properly service HUD-assigned reverse mortgages hurt the reverse mortgage industry. However, the move to assign HUD servicing contracts to Compu-Link is a good first step toward fixing that problem. Over the past two years, The reverse mortgage community is also working hard to rebuild trust.
Editor’s note: This article has been updated with a statement from Sutherland Global.
