Cypress Loan Servicing obtained an assurance of discontinuance from Massachusetts Superior Court in Suffolk County after agreeing to pay $2 million to settle legacy allegations.
The fee by the corporate, which beforehand operated as Rushmore Loan Management Services, will go towards a state penalty and borrower restitution. The courtroom settlement requires enterprise apply change and monitoring. It doesn’t admit or show wrongdoing.
Massachusetts Attorney General Andrea Joy Campbell’s statements concerning the settlement level to renewed curiosity throughout the state associated to imposing legal guidelines round guaranteeing servicers comply with debt assortment protocols.
Campbell mentioned in a press launch that the settlement “will assist guarantee compliance with significant shopper protections and put mortgage servicers on discover that Massachusetts is not going to tolerate illegal practices that put revenue over individuals.”
The firm couldn’t instantly be reached for remark at deadline.
Cypress bought its mortgage portfolio and had rebranded as a grasp mortgage servicer “however retains the flexibility to subcontract direct mortgage servicers,” in response to the Massachusetts AG’s press launch. The firm additionally retains the flexibility to work with debtors once more sooner or later.
The state’s considerations centered partially on mortgage modification allegations associated to state rule 35B, which requires ability-to-repay assessments, well timed responses to purposes when data is lacking, written assessments and disclosures important for negotiation.
“In many situations, Cypress unlawfully required customers to pay giant upfront down funds that weren’t topic to an affordability evaluation as a threshold requirement to coming into an in any other case inexpensive mortgage modification,” the AG alleged.
The AG additionally alleged that the corporate didn’t comply with debt assortment guidelines round name limits and disclosures.
In phrases of enterprise apply necessities, the settlement with the state requires the corporate to make sure that its subservicers are compliant. If the corporate returns to its function as a direct servicer, it’ll “implement detailed enterprise apply modifications focusing on previous noncompliance.”
The state AG additionally entered into an settlement from Franklin Credit Management late final 12 months that settled alleged violations of debt assortment guidelines calling for sure forms of borrower communication and good-faith efforts to keep away from foreclosures.
In that settlement, the corporate agreed to pay a $300,000 penalty and stop collections on a portfolio of outdated second liens within the state begun after a protracted interval of inactivity. The transfer successfully erased $10 million in borrower debt associated to so-called zombie seconds.
Zombie seconds additionally have been the main focus of laws close by Connecticut Gov. Ned Lamont signed earlier this 12 months. That legislation goals to guard customers with second liens established greater than 10 years in the past and factors to broader scrutiny of this situation on the state stage.
Other current mortgage-related enforcement actions the Massachusetts AG has pursued embrace a lawsuit towards home-equity funding platform Hometap which alleges the corporate violated shopper safety legal guidelines prohibiting misleading advertising and marketing practices, inflicting foreclosures danger.
The firm mentioned not one of the 563 shoppers it has initiated 10-year agreements with since its founding in 2018 have reached the tip of their phrases or reported foreclosures.
“Hometap firmly believes within the integrity of our merchandise,” the corporate mentioned in an announcement early this 12 months.
