Federal regulators fined mortgage servicer Green Tree Servicing $63 million in penalties and restitution on Tuesday, alleging that it mistreated borrowers at risk of foreclosure and failed to honor modifications of loans transferred from other servicers.
The Consumer Financial Protection Bureau and Federal Trade Commission claimed Green Tree "demanded payments before providing loss mitigation options," and "harassed and threatened overdue borrowers," among other things.
"Green Tree failed consumers who were struggling by prioritizing collecting payments over helping homeowners," CFPB Director Richard Cordray said in a press release. "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."
The St. Paul, Minn.-based company put out a statement that said it believes "this resolution is in the best interest of Green Tree, our consumers, our clients and our shareholders."
"With this settlement, the company and our employees will maintain our focus on the continuous improvement of our procedures and practices which will benefit all consumers and all stakeholders," said Mark O'Brien, the chairman and chief executive of Green Tree.
According to the CFPB and FTC, Green Tree allegedly delayed decisions on short sales and illegally revealed debts to third parties, including employers, between 2010 and 2014.
Green Tree will pay $48 million in restitution to borrowers whose loan modifications were not honored, had to pay what the CFPB terms as "deceptively charged convenience fees," or whose short sale decisions were delayed. Those borrowers who receive payments will not be forbidden from pursuing further legal action against the company. The company will also pay a $15 million settlement to the CFPB's Civil Penalty Fund.
The mortgage servicer will also be barred from foreclosing on homes until it has contacted all distressed borrowers to offer loss mitigation. The CFPB has ordered Green Tree to reach out to customers via both phone and mail to make them aware of all foreclosure prevention options before it can repossess a home.
