Consumer complaint received 2019-10-10
Company: SELECT PORTFOLIO SERVICING, INC.
State: VA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Struggling to pay mortgage

Complaint:
Pursuant to SPS ' letter dated XX/XX/XXXX and the Consumer Financial Protection Bureau ( CFPB ), Notice of Error for SPS ' failure to comply with the requirements of 12 C.F.R. 1024-41 ( d ). SPS did not answer my appeal dated XX/XX/XXXX within the 30 day time frame with a determination and is still went forward with pursing a foreclosure sale date more than 37 days before the appeal was closed. 
APPLICABLE LAW AND REGULATIONS The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ( the " DoddFrank Act '' ) transferred rulemaking authority for RESPA to the United States Consumer Financial Protection Bureau ( CFPB ) ( " the Bureau '' ). The Dodd-Frank Act also added a section to RESPA giving the Bureau the authority to establish prohibitions on servicers of federally-related mortgage loans for the purpose of carrying out the consumer protection goals of RESPA. 
In XX/XX/XXXX, the Bureau issued several final rules to address the systemic problems in the mortgage servicing industry described above and to implement protections for borrowers with regard to mortgage servicing. These new rules amended 12 C.F.R. Part 1024, RESPA ( Regulation X ), and became effective on XX/XX/XXXX.

Specifically, the Bureau enacted a rule requiring early intervention and communication with delinquent borrowers. " Servicers must establish or make good faith efforts to establish live contact with borrowers by the 36th day of their delinquency and promptly inform such borrowers, where appropriate, that loss mitigation options may be available. '' See 12 U.S.C. 1024-39. A " delinquency '' is defined as beginning on the day on which a payment sufficient to cover principal, interest and escrow, if applicable, is due and unpaid. The new rules clearly implemented procedural protections for borrowers with regard to the process of obtaining an evaluation for loss mitigation options and restrictions on the foreclosure process while borrowers are being evaluated for a loss mitigation option. See 12 C.F.R. 1024-41.
Notably, under RESPA, " [ l ] loss mitigation option means any alternative to foreclosure offered by the owner or assignee of a mortgage loan that is made available through the servicer to the borrower. '' 12 C.F.R. 1024-31. This definition was intended to be expansive, encompassing not just loan modifications, but also forbearance plans, short sale agreements, and deed-in-lieu of foreclosure programs. " Loss mitigation application means any oral or written request for a loss mitigation option that is accompanied by any information required by a servicer for evaluation for a loss mitigation option. '' Id.

Under RESPA, " [ s ] ervicer means a person responsible for servicing a federally related mortgage loan ( including the person who makes or holds such loan if such person also services the loan ). '' Id. " Servicing means receiving any scheduled periodic payments from a borrower pursuant to the terms of any federally related mortgage loan, including amounts for escrow accounts... and making the payments to the owner of the loan or other third parties of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the mortgage servicing loan documents or contract. '' Id.

The servicer is required to promptly review the application and determine whether it is complete. If a borrower submits a complete application for a loss mitigation option at least 45 days before a foreclosure sale, the servicer must acknowledge receipt in writing within 5 days ( excluding legal public holidays, Saturdays and Sundays ) and must inform the borrower whether the application is complete and what information is required to complete the application. See 12 U.S.C. 1024-41 ( b ) ( 2 ) ( B ). A " complete loss mitigation '' application means an application in connection with which a servicer has received all the information that the servicer requires from a borrower in evaluating applications for the loss mitigation options available to the borrower. See 12 U.S.C. 1024-41 ( b ) ( 1 ).

If a servicer receives a complete loss mitigation application more than 37 days before a foreclosure sale for the borrower 's property, then within 30 days of receiving the borrower 's loss mitigation application the servicer must : " ( i ) Evaluate the borrower for all loss mitigation options available to the borrower ; and ( ii ) Provide the borrower with a notice in writing stating the servicer 's determination of which loss mitigation options, if any, it will offer to the borrower on behalf of the owner or assignee of the mortgage loan. " Id. at 1024-41 ( c ) ( 1 ).

If a borrower 's loss mitigation application is denied for any trial or permanent loan modification option, then the servicer shall state in the notice sent to the borrower pursuant to 12 C.F.R. 1024-41 ( c ) " [ t ] he specific reasons for the servicer 's determination for each such trial or permanent loan modification option [. ] '' Id. at THE DENIAL OF MY APPLICATION WAS IMPROPER AS SPS FAILED TO COMPLY WITH 12 C.F.R. 1024-41 ( d ) Pursuant to 12 C.F.R 1024-41 ( d ) if the servicer denies the homeowner a loan modification, the servicer must state the " specific reason each modification option was denied ''. Supplement I to 12 C.F.R. Part 1024, Official Bureau Interpretations, provides the degree of specificity required of the servicer in denying a borrower for a loan modification. " For example, if the denial is based on investor requirements, the servicer must identify the owner or assignee of the loan and the requirement that is the basis of the denial. Additionally, if a loan modification is denied because of a 'net present value ' calculation, the servicer must provide the borrower with the inputs used in the calculation. '' In its letter, SPS declined me for a modification claiming that " Your request for workout assistance on the above referenced account has expired. This is either because we did not receive the required payment or because we did not receive the signed agreement.

I did accept the Repayment Plan, by making the 1st payment required of {$2700.00} by the XX/XX/XXXX deadline. I also made payments on XX/XX/XXXX and XX/XX/XXXX. 
SPS ' repayment plan sets me up for failure, I was immediately told the payment was not received and we were dismissed from the program without any investigation into the payment. I have submitted my bank statement both showing, the {$2700.00} payment was made and withdrawn from my account on XX/XX/XXXX. This is the second time SPS has said I did not make a payment on this plan. 

The CFPB requires that the appeal must be reviewed by different personnel than those responsible for evaluating the borrower 's application. And within 30 days of the borrower making an appeal, the servicer must provide a notice to the borrower stating the servicer 's determination of whether the servicer will offer the borrower a loss mitigation option based on the appeal. Id. at 1024-41 ( h ). RESPA also prohibits the practice of " dual tracking '' while the loss mitigation process is under way. That is, a servicer is precluded from initiating foreclosure proceedings while a loss mitigation application is being processed. Id. at ( g ). 
On XX/XX/XXXX you sent a letter only indicating you could not make a determination without more documentation, I am quoting from your letter Unfortunately, the statement is insufficient to determine if the funds were returned for non-sufficient funds ( NSF ). To determine this, we will need a valid rolling 30-day bank statement, showing credit and debits from the account. SPS sent the enclosed Non-Sufficient Funds ( NSF ) Notification dated XX/XX/XXXX, advising that the payment was returned. I provide the valid 30 day rolling bank statement on XX/XX/XXXX. I received a call on XX/XX/XXXX and returned it later that day, after speaking to a representative I was told the paperwork was received and appeal is still open. I asked at that time, if there was foreclosure sale date scheduled and was told NO. The very next day a letter was sent out with a Foreclosure Sale date of XX/XX/XXXX and the appeal has not been closed or a conclusion has not been determined to this date of XX/XX/XXXX, well past the 30 days required. This is a clear violation of the CFPB requirements. 
I expect a response canceling the foreclosure sale date because of this violation. I feel this is because I have on many occasions requested to view the original Note in person. I was told, as well as this was communicated to the Virginia US Attorneys offices that accommodations would be made to me, as long as I made the request in advance. I made the request in XX/XX/XXXX and so far every time I bring up the issue, my payments mysterious are not credited to my account, then I am no longer eligible for my Repayment Plan and facing a new foreclosure sale date. I have been waiting for over 7 months for SPS to make these arraignments and feel this is adequate time for them to make this happen.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation