Consumer complaint received 2021-06-10
Company: Specialized Loan Servicing Holdings LLC
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
I went through a Chapter XXXX in XXXX, and the plan was finalized XX/XX/XXXX. The account servicer at the time was XXXX XXXX XXXXXXXX XXXX. 

As part of the plan, the property was appraised at {$460000.00}, which was the bank 's ( XXXX XXXX  ) appraiser 's valuation. The remainder of the loan balance and missed payments - about {$300000.00} ) was converted to unsecured debt, and I was to make court-approved payments on the principal and the unsecured debt. 

I commenced to make both my payments on time, but in month 6 - XX/XX/XXXX - XXXX began to return my court ordered payments for both categories and started reporting to the credit agencies that I was delinquent. In XXXX of XXXX my bankruptcy firm sent a strongly worded letter to XXXX that they were in violation of the court approved plan. 

I continued to make all my payments on time, sent certified mail. For two and a half years the bank returned my court-ordered payments. Their reason was the funds were not sufficient to cover my payment. I called XXXX and their reasoning was that they were not accepting the cramdown, even though it was by federal court decree, and they wanted payment for the entire balance. To restate, by order of the court, and based on their own appraisal, the property was worth {$460000.00}, and the rest of the debt was in excess of the value of the property - established by their appraiser - and was thus converted to unsecure status. Under bankruptcy law, you can not secure a property for more than it is worth. They determined the worth, the court affirmed it. 

After two and a half years in XXXX I reopened my bankruptcy case, because I was having the exact same problem with XXXX XXXX XXXX that I have had with XXXX They were playing by the same playbook - refuse payments, report me as delinquent to the credit bureaus. 

The problem was I had a loan maturing with XXXX, and despite three years of on-time payments, XXXX XXXX lawyer ( he was XXXXXXXX XXXX lawyer, which originally had the note. But when the FDIC " sold '' XXXX to XXXX  for {$1.00} Billion dollars and gave XXXX XXXXXXXX XXXX {$40.00} Billion loan portfolio, he began to work for XXXX ) chose to move for a " voluntary foreclosure. '' This attorney had a personal animosity to me because the judge had removed the receiver XXXX had put in place, and gave me back my building. As a XXXX I was finishing a rehab on this historical property. The judge saw photos of my other building restorations and told " XXXXXXXX XXXX attorney that XXXX 's receiver was pocketing the money and not moving to finish the project whereas she had seen pictures of my other building restorations, and she knew that I would finish the project, instead of just pocketing the money. XXXX XXXX attorney, XXXX XXXX, who loved to brag how fast he could take your building, moved to foreclose. I was unable to refinance because, although I was making my court-ordered payments on time, both XXXX and XXXXXXXX XXXX XXXXXXXX XXXX were reporting me as delinquent, even though it was them returning my court ordered payments. 

Anyhow, I lost the building, and reached a settlement with XXXX without the judge 's assistance. She wanted to go to trial over what was a clear violation of the Federal Bankruptcy Court 's orders. I realized she was extremely biased against debtors, and did not pursue a case against XXXX at that time, even though they were still refusing my payments and destroying my credit. The judge closed my case in XX/XX/XXXX once she confirmed my settlement with XXXX. Given her open bias against debtors, I could not pursue XXXX in her court. 

After XXXX XXXX years of sending payments to XXXX, including paying off the " deficiency judgement '' which was the amount I owed on the unsecured portion of the debt, I stopped sending payments, because clearly they did not want the money, at least the money the court said they could have. I would call XXXX, and they would insist I owed the principal amount of {$680000.00}, plus all the missed payments. I would insist the court order was for {$460000.00} principal payments, and the rest was converted to unsecured debt. And we have been at a standstill for 12 years. 

In XX/XX/XXXX, four years after the confirmation of my Chapter 11 Plan of Reorganization, XXXX once again filed a foreclosure action against me - despite the fact I had met all the terms of my Bankruptcy. For reasons unknown to me, or that I can't remember, the bank rescinded the Notice of Foreclosure and ceased communication with me. I did receive a letter that my loan had reached the 10 year mark, and my payments were reduced because of the much lower interest rates prevailing that the 6 3/4 % of the original note, but a ) it was clear this was based on the complete original loan amount, which the court had struck down, and b ) I was advised by counsel not to pay the amount since it was not in concordance with the Federal rulings in my case. 

I did pay a credit repair service to demand XXXX stop reporting me as delinquent, when it was them refusing my payments. This was accomplished and my credit started to slowly improve. 

In XXXX the bank transferred my loan to Specialized Loan Servicing, which is XXXXXXXX XXXX outlaw servicer. I will pause here and remind everyone that XXXX XXXX has admitted to multiple counts of fraud, spanning many categories, so I am not making up the fact that they conduct business with a high level of fraud. 

I called SLS thinking perhaps we could have a fresh start. They were still insisting on the {$680000.00} principal. Following that, I would occasionally call SLS asking for a payoff, because I wanted to refi the note. By this point they were refusing to even discuss my loan stating that because the loan had matured in XXXX, there was confusion regarding the payoff amount. Finally in XXXX they sent me an IRS 1048 reflecting a {$460000.00} balance, but no other evidence of what they felt I owed them. Every time I would go to refi one of my other buildings, questions would arise about the property that SLS was servicing, and I would explain that SLS was basically refusing to discuss my loan. Banks, being the suspicious creatures they are would then reject my loan. I was forced to pay 9.9 % on commercial loans because SLS had so tarnished my reputation, despite a perfect payment history as reported by the credit bureaus. 

Four more years go by, I have no communication from SLS. Finally in XXXX of XXXX I get a letter from SLS saying they are ready, under California Law, to avoid foreclosure. 

Once again, no mention of what is owed or any facts related to my loan. 

On XX/XX/XXXX SLS hires a law firm and they record a notice of default against my property, demanding {$95000.00} in arrears and a principal amount of {$680000.00}, the number that was converted to {$460000.00} principal and the balance as unsecured debt 13 years ago in Federal Court. SLS has now ignored the Federal Bankruptcy Court 's ruling for 12 years, destroying my credit, threatening my livelihood, the reputational damage of an unpaid loan. 

I hired an attorney and we sent their counsel a request for a payoff letter for the loan. Their counsel insisted we contact SLS directly. My attorney wrote SLS a letter asking for a payoff letter. SLS responded that it was their attorney that would have to provide such documents, but that a payoff letter would be forthcoming.

Weeks went by and no letter. My attorney wrote SLS 's attorney again, demanding that either they or SLS provide a payoff letter. 

Finally, on XX/XX/XXXX we received a payoff letter from SLS. It is demanding over {$1.00} XXXX dollars to pay off the loan. In the payoff they state there is {$460000.00} principal owed and they refer to the part of the that was converted to unsecured - and which I paid off - as " deferred principal, '' which is not in the bankruptcy plan. 

They further create payments and fees, based on information in defiance of the Reorganization Plan, bringing the balance owed to over {$1.00} XXXX dollars. 

So now we have a bank that has openly defied the XXXX XXXX, that has changed the default amount from {$95000.00} and {$680000.00} to over {$1.00} XXXX dollars. 

Under Bankruptcy law any amounts that are in concordance with the plan, and are returned by the creditor, are forfeited by the creditor. You can not refuse court ordered payments to trigger a default. You refuse payment, you lose it. Just to be clear, I have always kept my casualty hazard insurance paid up on this property. 

I am seeking to resolve this matter in concordance with the Bankruptcy Plan that was approved in XXXX. I want the NOD withdrawn. Unfortunately, otherwise I will have to seek sanctions and relief from the XXXX XXXX for this egregious ignoring of a confirmed bankruptcy plan, the reporting of false information to the credit bureaus, loss of reputation and of course their culpability in reporting false information to the credit bureaus that resulted in me not being able to refi my XXXX property, which would now be worth in excess of {$2.00} XXXX dollars. 

12 years of stress, even though I have followed the court order to a " t '' and SLS and XXXX act as if the court order doesn't exist. 

I would appreciate any help you can offer in resolving this. CFPB was instrumental in resolving the XXXX case, which was a mirror of this problem, but which was resolved - with your help - in XXXX. 

Thank you.

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