I went looking to see how much news coverage there was of a recent settlement involving a national mortgage servicing company.
Not as much as there should have been, given that the proposed settlement points to the fallout we are still experiencing from the housing crisis.
So many people are quick to blast borrowers for getting themselves into mortgage trouble. But we should never forget the actions of companies that took people down — and then once they were down, hired other companies to strong-arm them with despicable collection actions.
That’s why you should pay attention to the $63 million that Green Tree Servicing has agreed to pony up for allegedly employing deceptive and unlawful practices against mortgage borrowers who were trying to save their homes from foreclosure. The Federal Trade Commission and the Consumer Financial Protection Bureau filed a complaint against the company and settled this month.
Let’s just run down what the two regulators allege Green Tree collectors did to consumers, according to the complaint:
• They unlawfully threatened borrowers with arrest or imprisonment, seizure of property, garnishment of wages and foreclosure.
• They called consumers multiple times a day, as early as 5 a.m. and as late as 11 p.m. OK, you would expect people to get called if they were behind on their mortgage. But some borrowers were getting seven to 20 calls a day. In some cases, people were called after missing their payment by one day.
• They yelled and cursed people out and called them “deadbeats” or “worthless,” or told them to “get a real job” or that “you should leave your husband if he can’t provide for you.”
• They unlawfully revealed debts to consumers’ employers, co-workers, neighbors and family members in an effort to elicit help from these folks to get the consumers to pay up.
• They took payments from some consumers’ bank accounts without authorization.
• They told consumers they didn’t have a grace period during which they could pay their mortgage without incurring a late fee. And because people believed they didn’t have a grace period and thus would be assessed a late fee, they felt pressured to use a pay-by-phone service, called “Speedpay,” which cost $12.
• They misled people about what they had to do to be considered for a loan modification. Some borrowers were told they had to make a payment to be considered for a loan modification. However, as the regulators point out, the federal Home Affordable Modification Program does not allow participating servicers, including Green Tree, to require consumers to make payments before they are considered for a modification.
• They took months to respond to short-sale requests. A short sale is when the lender agrees to accept less than what is owed on the mortgage. Such delays often result in potential buyers walking away from deals, and that can result in a foreclosure.
Green Tree denied any wrongdoing.
Under the proposed settlement, Green Tree will pay a $15 million civil penalty and $48 million will go to consumers whose loan modifications were not honored, or who were charged convenience fees or whose short sales were delayed. As part of the settlement, the company has to work with homeowners to put in place permanent modifications and reach out to others who may need help.
Here’s something important to note in the relationship between borrowers and servicers, the agencies pointed out. You can choose your lender. But you can’t sever ties with your mortgage servicer.
I’ve repeatedly said that businesses have a right to collect debts owed. But they shouldn’t abuse people in the process.
Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com
