The Federal Trade Commission and Consumer Financial Protection Bureau are not playing any games when it comes to making loan servicers pay for illegal and unscrupulous behavior. The latest case, Green Tree Servicing LLC.
Today, the FTC and CFPB reached a settlement with Green Tree. In a joint agency complaint, the FTC and CFPB alleged foul play: Green Tree committed a slew of unfair and deceptive practices in loan servicing, debt collection, and credit reporting that affected homeowners nationwide.
Among Green Tree’s alleged swing-and-miss-behavior:
Strike One — Loan Servicing: Green Tree misrepresented that customers had to make additional payments to be eligible for a loan modification; failed to honor loan modifications from previous loan servicers; and misrepresented the time it would take to respond to a request for a short sale, causing people to fall into delinquency or even foreclosure.
Strike Two — Debt Collection: Green Tree falsely represented how much people owed or the legal status of their debts; told third parties, including employers, about people’s debts; and called people repeatedly and used abusive language.
Strike Three — Credit Reporting: Green Tree furnished credit reporting agencies with customer information it knew was inaccurate, and failed to correct inaccurate information in a timely manner.
Under the proposed settlement, Green Tree will pay a total of $63 million: $48 million in refunds to consumers, and $15 million in civil penalties. In addition, Green Tree must create a program to test the accuracy of its data, cease its illegal debt collection and credit reporting practices, and implement a home preservation program to ensure that it honors loan modifications.
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