Mortgage Servicing Company Green Tree Will Pay $63 Million to Settle FTC, CFPB Charges

Mortgage Servicing Company Green Tree Will Pay $63 Million to Settle FTC, CFPB Charges
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April 22, 2015

A national mortgage servicing company will pay $63 million to resolve Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) charges that it harmed homeowners with illegal loan servicing and debt collection practices.

The FTC and CFPB allege that Green Tree Servicing LLC made illegal and abusive debt collection calls to consumers and misrepresented the amounts people owed, among other charges.

According to the complaint, in many instances, Green Tree failed to honor loan modifications that were in the process of being finalized when consumers' loans were transferred from other servicers to Green Tree. This resulted in consumers making higher monthly payments, receiving collection calls, and even losing their homes to foreclosure.

The agencies also allege that Green Tree pressured consumers to make payments via Speedpay, a third-party service that charges a $12 "convenience" fee per transaction, claiming it was the only way to pay, or that consumers had to use the service to avoid a late fee.

"It's against the law for a loan servicer to lie about the debts people owe, or threaten and harass people about their debts," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "Working together, the FTC and CFPB are holding Green Tree responsible for mistreating homeowners, including people in financial distress."

"Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners," said CFPB Director Richard Cordray. "When homeowners in distress had their mortgages transferred to Green Tree, their previous foreclosure relief plans were not maintained. We are holding Green Tree accountable for its unlawful conduct."

Under the proposed settlement, Green Tree will pay $48 million to affected consumers, along with a $15 million civil penalty.

The company will also stop its alleged illegal practices, create a home preservation plan for some distressed homeowners, and take rigorous steps to ensure that it collects the correct amounts from consumers.

The proposed order also prohibits Green Tree from making material misrepresentations about loans, processing procedures, payment methods, and fees, from taking unauthorized withdrawals from consumer accounts, and from violating the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act.

Green Tree has become the servicer for a substantial number of consumers who were behind on their mortgage payments at the time their loans were transferred to Green Tree. Because homeowners cannot choose their servicer, they are locked into a relationship with the company for as long as it services their loans.