Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Mortgage servicer to pay $63 million to Settle FTC, CFPB charges, (Apr 21, 2015)

By Jody Coultas, J.D.

National mortgage servicing company Green Tree Servicing LLC settled FTC and Consumer Financial Protection Bureau (CFPB) charges that it made illegal and abusive debt collection calls to consumers, misrepresented the amounts people owed, and failed to honor loan modification agreements between consumers and their prior servicers (FTC v. Green Tree Servicing LLC, File No. 112 3008, Civil Action No. 15-2064).

Green Tree’s collectors allegedly constantly called consumers who were late on mortgage payments threatening arrest or imprisonment, seizure of property, garnishment of wages, and foreclosure, and used loud and abusive language, including calling consumers “deadbeats,” mocking their illnesses and other struggles, and yelling and cursing at them. FTC and CFPB also alleged that Green Tree revealed consumers’ debts to their employers, co-workers, neighbors, and family members, and encouraged them to tell the consumers to pay the debt or help them pay it. The complaint also alleges that Green Tree took payments from some consumers’ bank accounts without their consent.

Consumers that made payments were forced to use a third-party service that charged a $12 “convenience” fee per transaction. Green Tree allegedly misrepresented the amounts consumers owed or the terms of their loans, including telling consumers they owed fees they did not owe, or that they had to make higher monthly payments than their mortgage contracts required.

The FTC and CFPB also alleged that 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. Green Tree also allegedly misled consumers about their loss mitigation options.

Green Tree agreed to pay $48 million to affected consumers and a $15 million civil penalty. The company also will 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.

Attorneys: Steven M. Kaplan (K&L Gates LLP) and Elizabeth L. McKeen (O'Melveny & Myers LLP) for Green Tree Servicing, LLC.

Companies: Green Tree Servicing, LLC

News: ConsumerProtection FederalTradeCommissionNews