Consumer complaint received 2024-01-15
Company: Specialized Loan Servicing Holdings LLC
State: NC
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Struggling to pay mortgage
Sub-issue: Foreclosure

Complaint:
Starting around the end of XXXX XXXX continuing through the present (almost 4 months), we have been gathering ALL the information and documents, combing through literally thousands of papers and files, needed to show what has transpired over the last 19 YEARS. Thats right, I said 19 YEARS! We NEVER throw anything away, no receipts, check stubs, bank statements, etc., and have ALL the documents that were sent to us that pertain to this Time-Barred Debt in question. Due to this being OVER 19 YEARS AGO, with 13 YEARS OF DORMANT, ZERO ACTIVITY, it has been, and still is, a VERY DIFFICULT, EXTREMELY SLOW, TIME CONSUMING, and DAUNTING TASK, at best.

       *******We will show that we have undoubtedly suffered IRREPARABLE HARM and DAMAGE, resulting from the UNQUESTIONABLE, UNREASONABLE, and UNORTHODOX 13 YEAR DELAY, which caused us to forego TIMELY OPTIONS to address the TIME-BARRED DEBT in question, such as through loss mitigation!!!*******

     *******We received, delivered by a XXXX XXXX XXXX XXXX a Notice Of Hearing On Foreclosure Of Deed Of Trust on XXXX XXXX XXXX. It states that the hearing will be on XXXX XXXX XXXX  Also, in this notice, it WRONGLY STATES that the date of the Deed Of Trust is XXXX XXXX XXXX IT IS MOST DEFINITELY NOT!!! Why does it state that???*******

       *******We ask, FIRST, that the agencies/persons that will be reviewing this MASSIVE number of documents, files, and information, put a STAY on the foreclosure precedings until they can thoroughly examine the documents that show, and PROVES our defense. Once examined, we ask that the Deed of Trust be CANCELLED/SATISFIED, and/or that the respective agencies, take ALL ACTIONS WARRANTED against Specialized Loan Servicing, the servicer, LOGS Legal Group LLP, the attorney and/or debt collector, and Nationwide, the insurance company!!!*******


Our story is as follows:


     My wife and I took out a second mortgage (and refinanced our first mortgage) on XXXX XXXX XXXX, almost 19 YEARS AGO, for $XXXX. Both the refinance and second mortgage were with Dream House Mortgage Corporation.

     The second mortgage was serviced by Specialized Loan Servicing. We have all the documents, EXCEPT FOR the 13 YEARS they sent NOTHING, pertaining to the Time-Barred Debt in question, also known as zombie debt, that was sent to us by the servicer.

     On XXXX XXXX XXXX, we made our first payment to the Time-Barred Debt in question, and the last payment was made on XXXX XXXX XXXX. On XXXX XXXX XXXX, we did a loan modification.

     On XXXX XXXX XXXX, we filed for XXXX XXXX Bankruptcy. We were discharged on XXXX XXXX XXXX. Keeping our home, of now over 24 years, where we raised 3 children, now helping raise 2 grandchildren, was, and STILL IS, of the UPMOST IMPORTANCE, as we continued making payments on BOTH the first mortgage and the Time-Barred Debt in question.

     On XXXX XXXX XXXX, we got a loan modification on our first mortgage, as we were told we were getting the Federal Government program Hope for Homeowners Loan Modification, in which the Time-Barred Debt in question was written off, or forgiven. We completed the required trial payments, finalizing the loan modification for the first mortgage, thus solidifying more that the Time-Barred Debt in question had been written off/forgiven. We also made our regular payments to the Time-Barred Debt in question, during the required trial payments on the first mortgage loan modification. The reason we continued making payments was, as per our understanding, the Time-Barred Debt in question would not be written off/forgiven until the trial payments of the first mortgage were completed, and the first mortgage loan modification became effective.
  
     The last statement (at the time) we received from Specialized Loan Servicing was on XXXX XXXX XXXX. Then, almost 13 YEARS LATER, we received a statement from them on XXXX XXXX XXXX. The last letter (at the time) we received from Specialized Loan Servicing was on XXXX XXXX XXXX. Then, almost 12 YEARS LATER, we received a letter from them on XXXX XXXX XXXX, which happened to be just a GENERIC PRIVACY NOTICE, that just came out of nowhere.

     *******AFTER XXXX XXXX, WE NEVER HEARD FROM SPECIALIZED LOAN SERVICING AGAIN...UNTIL...XXXX XXXX XXXX THE DAY THEY SENT A GENERIC PRIVACY NOTICE. WE HAD NO EARTHLY IDEA WHY THEY SENT THAT BECAUSE AGAIN, WE THOUGHT THAT IT HAD BEEN WRITTEN OFF/FORGIVEN IN THE LOAN MODIFICATION OF THE FIRST MORTGAGE. WE ALSO THOUGHT THAT WAS VERY STRANGE TO SEND A PRIVACY NOTICE, TO SAY IT MILDLY, BECAUSE IT HAD BEEN OVER 13 YEARS SINCE THEY HAD SENT THE LAST STATEMENT, SO NATURALLY, AGAIN, WE THOUGHT IT WAS WRITTEN OFF/FORGIVEN!!!*******

     *******The first statement they sent since XXXX XXXX XXXX, was on XXXX XXXX XXXX, 13 YEARS LATER!!! AGAIN, we honestly had NO IDEA why they sent that statement, as we first thought it was sent by MISTAKE. That TOO was VERY STRANGE to us, to say it mildly, because it had been over 13 YEARS since they had sent the last statement, and WE THOUGHT IT WAS WRITTEN OFF/FORGIVEN!!!*******


     Fast forward to NOW, ALMOST 19 YEARS LATER, thats right, ALMOST 19 YEARS LATER, in which we get a letter (sometime around the end of XXXX first of XXXX XXXX), NOT DATED, from XXXX XXXX XXXX XXXX acting as a debt collector, stating that we owe $XXXX (again, we are disputing the validity of the Time-Barred Debt in question, in its entirety). The original loan amount was $XXXX What??? Are you kidding me??? How on earth did they come up with that figure???

     In the UNDATED letter, there are ZERO DETAILS, just a number, and a copy of the XXXX XXXX XXXX statement. That included statement (and the statements we have), shows they ILLEGALLY add $XXXX (the original interest and principal payment in XXXX), to the Time-Barred Debt in question, EVERY SINGLE MONTH, RESULTING IN ADDITIONAL PRINCIPLE ADDED TO THE LOAN.
     
     I think that is worth repeating. Specialized Loan Servicing ILLEGALLY ADDS PRINCIPLE to the Time-Barred Debt in question, EVERY SINGLE MONTH, THUS creating a LOAN that can NEVER BE PAID OFF!!!
     
     In all the loans that I have taken out over the last 35 years, I have NEVER had, OR heard of a loan, that ADDS PRINCIPLE to the BALANCE EVERY SINGLE MONTH, THUS creating a loan that can NEVER BE PAID OFF!!!

     I have also NEVER heard of a lender that waits ALMOST 19 YEARS to try and collect on a Time-Barred Debt, that the customer thought was WRITTEN OFF/FORGIVEN!!! Thats just plain INSANITY, but more importantly, its ILLEGAL!!!

     It states in the letter that we Call or write to us by XXXX XXXX XXXX, to dispute all or part of the debt. If you do not, we will assume that our information is correct. It also states that If you write to us by XXXX XXXX XXXX, we must stop collection on any amount you dispute until we send you information that shows you owe the debt. You may use the form below or write to us without the form. You may also include supporting documents. We are DISPUTING ALL the Time-Barred Debt in question!!!

     On XXXX XXXX XXXX, my wife and I sent Specialized Loan Servicing, and XXXX XXXX XXXX XXXX a Dispute Letter to that UNDATED letter. We sent it VIA CERTIFIED MAIL. Then, I receive two separate letters from Specialized Loan Servicing, both dated XXXX XXXX XXXX, one stating that they had received the XXXX XXXX XXXX, Dispute Letter we sent them, and the other stating that they had received our cease-and-desist letter. Next, I receive another letter from them (SLS), dated XXXX XXXX XXXX, stating that they needed more time to review the case.

     Then, on XXXX XXXX XXXX, I receive 100 pages (32 pages are duplicate statements...hmmm...thats strange), of mostly statements and loan activity reports, from Specialized Loan Servicing. I think thats worth repeating...It took them almost 2 months to respond to our XXXX XXXX XXXX, letter, and they come up with 32 PAGES OF DUPLICATE STATEMENTS? Do you think that was done on purpose? Absolutely, of course it was! They wanted to INFLATE the documents to make it look like they really have some big case.

     Next, we receive a 28-page document, dated XXXX XXXX XXXX, from XXXX XXXX XXXX XXXX, that mirrors the same information that was sent in the previous letter by Specialized Loan Servicing. Lastly, to date, we receive a letter from XXXX XXXX XXXX XXXX, dated XXXX XXXX XXXX, of the supposedly updated amount from the Time-Barred Debt in question.
 
     Taken from part of the Consumer Financial Protection Breau (Regulation F), it states that Regulation F prohibits a debt collector from suing or threatening to sue to collect a time-barred debt.14 As the CFPB explained in finalizing this prohibition, a debt collector who sues or threatens to sue a consumer to collect a time-barred debt explicitly or implicitly misrepresents to the consumer that the debt is legally enforceable, and that misrepresentation is material to consumers because it may affect their conduct with regard to the collection of that debt, including whether to pay it. 15 Regulation Fs prohibition on suits and threats of suit on time-barred debt is subject to a strict liability standard.16 That is, a debt collector who sues or threatens to sue to collect a time barred debt violates the prohibition even if the debt collector neither knew nor should have known that a debt was time barred. 17 Accordingly, a debt collector who brings or threatens to bring a State court foreclosure action with respect to a time-barred mortgage debt may violate the FDCPA and Regulation F. This is true even if the debt collector neither knew nor should have known that the debt was time barred.

     We have been current on our first mortgage ever since I built our house, and we moved in on XXXX XXXX XXXX. Yes, like most people, we have been affected by several life situations that hit us very hard, like the Great Recession in XXXX, AND the XXXX XXXX in early XXXX, and we STILL havent fully recovered from the latter.

     I say that because there has been some equity in the house over the last several years, BUT after our county JUST FINISHED property tax re-evaluations, starting with the XXXX XXXX tax bill, EVERYONES property values INCREASED to between 25 and 50 percent. Our property values increased almost 35 percent, which created 35 percent additional positive equity. Now with that increased positive equity, and the first mortgage still CURRENT, they are ready to try to CASH IN, BIG TIME!!!

     ALSO, which is VERY UNUSUAL, UNCOMMON, UNCHARACTERISTIC, and ILLEGAL, is that on XXXX XXXX XXXX, I received a call from a representative from XXXX, our homeowners insurance company. He stated that they received information from Specialized Loan Servicing, INSTRUCTING them to CANCEL OUR INSURANCE POLICY, effective on the renewal date of XXXX XXXX XXXX, because they were going to foreclose on our house. What??? Are you kidding me??? First, that is ILLEGAL, as NO ONE has the power to cancel my homeowners insurance policy, EXCEPT ME, unless for non-payment of such said insurance, in which the right to cancel at that point would fall in the hands of the insurance company!!! That said insurance bill is paid yearly, out of the escrow account, that is set up within our first mortgage, which is included in our monthly payment (principal, interest, insurance, and property taxes), adjusted annually. Second, why would they do that, UNLESS they were trying to UNLAWFULLY inflict MORE IRREPARABLE HARM and DAMAGE on us!!! Lastly (for now), we will MOST DEFINITELY investigate this more thoroughly with NOT ONLY the servicer, BUT the INSURANCE COMPANY (XXXX) as well. We ask that the Consumer Financial Protection Bureau, and their respective agencies, mirror the same.

     As of XXXX XXXX XXXX, we NOW HAVE homeowners insurance coverage, that will go into effect at XXXX XXXX  on XXXX XXXX XXXX, the date that it was supposed to renew on with XXXX. I spent several days getting quotes and talking to several different insurance companies. It HAS BEEN PAID IN FULL, BY US, as of XXXX XXXX XXXX.

     We DEMAND that with the EVIDENCE presented here, the Consumer Financial Protection Bureau, and their respective agencies, take ALL ACTIONS WARRANTED against Specialized Loan Servicing, the servicer, and XXXX XXXX XXXX XXXX the attorney and/or debt collector, as FIRST in aiding the stoppage of the planned foreclosure proceedings. We also DEMAND that the Consumer Financial Protection Bureau, and their respective agencies, take ALL ACTIONS WARRANTED against XXXX, the insurance company, as they have forced us into wasting more valuable time, scrambling around, adding ADDITIONAL COSTS not warranted, to SIMPLY provide insurance to cover OUR PROPERTY starting on XXXX XXXX XXXX the date in which it is supposed to renew. We STRONGLY feel that with ALL OF THE EVIDENCE SHOWN, the Consumer Financial Protection Bureau, and their respective agencies, will ACT PROMPTLY and FORCEFULLY, STOPPING THE FORECLOSURE, AS TIME IS OF THE ESSENCE!!!

     Specialized Loan Servicing and/or the debt collector should be aware of, and are in violation of, the rules and procedures outlined in, BUT not limited to, the XXXX XXXX XXXX XXXX XXXX XXXX XXXX......CONSUMER FINANCIAL PROTECTION BUREAU 12 CFR Part 1006 Fair Debt Collection Practices Act (Regulation F); Time-Barred Debt.......CONSUMER FINANCIAL PROTECTION ACT OF 2010.......12 CFR Part 1024 - Real Estate Settlement Procedures Act (Regulation X).......and there are SEVERAL Truth in Lending Act (TILA) and/or Real Estate Settlement Procedures Act (RESPA) violations, as well.

     Explained in the Consumer Financial Protection Bureau 12 CFR Part 1006 Fair Debt Collection Practices Act (Regulation F); Time-Barred Debt: time-barred debts are debts for which the applicable statute of limitations has expired. Along with private plaintiffs, the Consumer Financial Protection Bureau and state attorneys general have the authority in appropriate circumstances to take action against institutions and individuals violating The Fair Debt Practices Act and Regulation F. The Consumer Financial Protection Bureau will be monitoring the debt collection market for violations related to time-barred mortgages as well as to time-barred non-mortgage debt.

     In XXXX XXXX, the statute of limitations for collecting on mortgage debt is 10 years. It has been almost 19 YEARS, YES, 19 YEARS, consequently, the statute of limitations has EXPIRED, deeming it NOT COLLECTIBLE OR REDEEMABLE.

XXXX XXXX XXXX XXXX XXXX, which states that:
 
     Within ten years, an action - 

3) For the foreclosure of a mortgage, or deed in trust for creditors with a power of sale, of real property, where the mortgagor or grantor has been in possession of the property, within ten years after the forfeiture of the mortgage, or after the power of sale became absolute, or within ten years after the last payment on the same.

4) For the redemption of a mortgage, where the mortgagee has been in possession, or for a residuary interest under a deed in trust for creditors, where the trustee or those holding under him has been in possession, within ten years after the right of action accrued.

Also, the CFPB also notes:

     If you were contacted by a debt collector for a mortgage that you havent heard about in years, then you might have a zombie mortgage.
The Consumer Financial Protection Bureau has received a concerning number of consumer complaints and has heard from advocates about what are sometimes referred to as zombie second mortgages. Homeowners may think that a mortgage debt was forgiven or was satisfied long ago by loan modifications or bankruptcy proceedings. Then years later, debt collectors reach out threatening foreclosure and demanding the homeowner pay the outstanding balance of the mortgage, along with years of interest and fees.
Here is one consumers story:

We obtained a second mortgage with [company] when we purchased our home in XXXX. Two years later in XXXX  property values started to decline and mortgage companies started to go out of business which led to losing my job of 10 years. They were extremely difficult times for my family financially and emotionally. We started to fall behind with our bills and our mortgages. I was able to modify my first mortgage lender. I continued to fall deeply behind with our second mortgage with [company]. We tried to modify the second mortgage several times after we fell behind but [company] would not work with us and gave us the run around. Through the years I tried again to modify not knowing who can assist us. We did not receive phone calls from [company] for a few years. Not until a year ago or so when property values started to increase, we have aggressively been receiving letters requesting large amounts of money to bring the loan current, money that we do not have.

     Entities selling or collecting on these second mortgages who are mortgage servicers may also be subject to certain requirements under the Real Estate Settlement Procedures Act, the Truth in Lending Act, and the CFPBs mortgage servicing regulations. For example, unless an exemption applies, the CFPBs mortgage servicing regulations require servicers to provide periodic statements to consumers.

    It is illegal for debt collectors to sue or threaten to sue to collect debts past the statute of limitations. Some debt collectors, who sat silent for a decade, are now pursuing homeowners on zombie mortgages inflated with interest and fees, said CFPB Director XXXX XXXX. We are making clear that threatening to sue to collect on expired zombie mortgage debt is illegal.

The National Consumer Law Center states that:

     Claims under TILA and RESPA can be raised against the owners and servicers of zombie second mortgages. Junior mortgages are not exempt from most of the important TILA and RESPA provisions, although some requirements do not apply to HELOC loans. 

     Both TILA and RESPA allow claims for statutory penalties, compensatory damages, and attorney fees. These laws also establish an important industry standardthat owners and servicers of mortgage loans must keep borrowers regularly informed about the status of their loans. Claims under TILA and RESPA can include:

	TILA transfer of loan ownership notices. Effective in XXXX, provisions of Regulation Z require that new owners or assignees of mortgage loans inform borrowers of a transfer of loan ownership within thirty days after a loan is sold. 12 C.F.R.  1026.39(b), implementing 15 U.S.C.  1641(g). Transfer of ownership notices must provide specific information that borrowers need to understand their current payment obligations. The failure to inform borrowers of sales of their loans contributes to the expectation that there is no need take action regarding an ongoing payment obligation. 

	RESPA notice of transfer of mortgage servicing rights. A transfer of servicing rights for a second mortgage triggers obligations under RESPA for both the transferor servicer and the transferee servicer to provide a timely notice to the borrower. 12 U.S.C.  2605(b); Reg. X 12 C.F.R.  1024.33(b). Failure to give timely notice deprives a borrower of another important tool for ascertaining the status of an account. 

	The TILA periodic statement requirements. Amendments to the TILA periodic statement rule were designed to prevent the surprise appearance of a long-dormant second mortgage together with unexpected claims for years of accrued interest and fees. See Reg. Z, 12 C.F.R.  1026.41, implementing 15 U.S.C.  1638(f). Under the rule, servicers must keep borrowers informed about the status of a second mortgage, including whether it has been charged-off or re-activated for collection, as well as who currently owns the loan and how to contact appropriate parties for up-to-date information. The rule requires heightened periodic statement disclosures when the loan is in arrears. The initial version of this periodic statement rule went into effect in XXXX XXXX. Amendments effective in XXXX XXXX added requirements for disclosing the charged-off status of a loan and for giving notice before collection on a charged-off loan resumed. 12 C.F.R.  1026.41(e)(6). The amended rule bars collection of interest and fees that a lender alleges accrued after the lender gave notice of charge-off and before it gave notice of resumption of payments. 12 C.F.R.  1026.41(e)(6)(ii)(B).

	TILA rescission. A successful TILA rescission voids a lenders security interest in the borrowers real property, effectively barring a foreclosure. 

	Equitable defenses to foreclosure may be available when the owner of a zombie mortgage seeks to foreclose after the account has remained inactive for many years. The foreclosure may be barred under the doctrines of unclean hands or laches. The elements of laches under a typical state law are: (1) the creditors knowledge of the cause of action, (2) an unreasonable delay in commencing the action, and (3) damage resulting from the unreasonable delay. Borrowers who believed their loans had been written off or modified and could not communicate with anyone about the loan for years may have foregone timely options to address the loan default, such as through loss mitigation. 

     As we are disputing the validity of the TIME-BARRED DEBT in question, in its entirety, this document will serve to as that, and as a complaint to several agencies, attaching the relevant files when possible. In no way should this document and complaint be construed as our complete and final defense, as it is not.

     *******The mortgage company is Specialized Loan Servicing, whom the Consumer Financial Protection Bureau issued a 32-page consent order against them on XXXX XXXX XXXX (File No. 2020-BCFP-0002), for these SAME ACTIONS*******

     The Bureaus investigation found that since XXXX XXXX, Specialized Loan Servicing violated RESPA and Regulation X by taking prohibited foreclosure actions against mortgage borrowers who were entitled to protection from foreclosure, and by failing to send or to timely send evaluation notices to mortgage borrowers who were entitled to them. These violations also constitute violations of the Consumer Financial Protection Act of 2010. In some cases, Specialized Loan Serving violations of Regulation X short-circuited the protections against foreclosure for consumers whose homes were ultimately foreclosed upon.

     *******On XXXX XXXX XXXX, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX, did an investigation titled What is a zombie mortgage? Couple facing foreclosure because of 'zombie' loan | What to know. It was about a XXXX XXXX couple facing foreclosure because of what's known as a "zombie loan, as it refers to a second mortgage that seemed to have been forgiven or written off - until years later when a collector reaches out about the unknown, but supposedly unpaid, debt. It was very similar to our case, and of course, Specialized Loan Servicing was the servicer. At the end of the story, they stated that XXXX XXXX XXXX XXXX XXXX tried to contact Specialized Loan Servicing for a statement but no one responded to an email or could be reached by phone.*******

     *******There are MANY stories and reviews by people across the United States that Specialized Loan Servicing and its Debt Collectors have treated them exactly the way we have been treated. Its hard to imagine that after almost 19 years, a Time-Barred Debt, zombie loan, that WE THOUGHT WAS WRITTEN OFF, could DESTROY a family, possibly making them LOSE YEARS worth of hundreds of thousands of dollars in built up equity, and even WORSE, possibly LOSING THEIR HOME. 
     
     *******Due to the seriousness of this matter, it is time, AGAIN, for the Consumer Financial Protection Bureau, the State of XXXX XXXX, and their respective agencies to take ACTION, NOW, IMMEDIATELY!!!*******

     *******We have undoubtedly suffered IRREPARABLE HARM and DAMAGE, resulting from the UNQUESTIONABLE, UNREASONABLE, and UNORTHODOX 19-YEAR DELAY, which caused us to forego TIMELY OPTIONS to address the TIME-BARRED DEBT in question, such as through loss mitigation!!!*******

       *******We are DISPUTING the validity of the TIME-BARRED DEBT in question, in its ENTIRETY, conforming to the RULES and LAWS set forth by the Consumer Financial Protection Bureau, the XXXX XXXX XXXX XXXX, and their respective agencies. Based on those RULES and LAWS, the FACTS presented show that WE DO NOT OWE the TIME-BARRED DEBT in question, as it is not COLLECTIBLE OR REDEEMABLE!!!*******

     *******We are stating, as one of our defense claims, that the debt in question is TIME-BARRED by the applicable statute of limitations listed below, and that TIME-BARRED DEBT, in which the statute of limitations has expired, is no longer COLLECTIBLE OR REDEEMABLE!!!*******

     *******We are also stating, as another defense claim, that we have undoubtedly suffered IRREPARABLE HARM and DAMAGE, resulting from the UNQUESTIONABLE, UNREASONABLE, and UNORTHODOX 19-YEAR DELAY, which caused us to forego TIMELY OPTIONS to address the TIME-BARRED DEBT in question, such as through loss mitigation!!!*******

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation