Consumer complaint received 2024-01-04
Company: Specialized Loan Servicing Holdings LLC
State: GA
Product: Debt collection
Sub-product: Mortgage debt
Issue: False statements or representation
Sub-issue: Attempted to collect wrong amount

Complaint:
I purchased my home 17 years ago with a first and second mortgage. The original lender, XXXX XXXX XXXX ( owned in turn by XXXX XXXX XXXX ), was known for making subprime mortgages and engaging in predatory servicing of its loans whereby it would, for example, fail to provide borrowers with timely or clear information about payment due dates and amounts owed. 

The second mortgage had an original loan amount of {$19000.00}, but only {$2700.00} of that amount was scheduled to be paid over the XXXX loan term, with a remaining a balloon payment of {$17000.00} due at the end of the loan. Thus, if I was unable to refinance 15 years after the loan was made, the loan was built to maximize the risk of foreclosure. 

In XXXX, during the economic downturn, I experienced financial hardship and became XXXX, rendering me unable to work. I entered XXXX XXXX bankruptcy. When I received a discharge in my bankruptcy later that year later, I mistakenly understood that the second mortgage debt had been eliminated as a lien on my home. 

After my exit from bankruptcy in XXXX, I did not receive any mortgage statements or other correspondence from the servicer, Specialized Loan Servicing ( SLS ), or any other source about the second mortgage until I received a debt verification notice from a law firm, XXXX XXXX XXXX XXXX XXXX ( XXXX ), in XX/XX/XXXX. ( During the same time period, I continued to receive payment invoices for the first mortgage on my home and am current on the payments. ) The lack of any correspondence about the second mortgage from XXXX until XX/XX/XXXX reinforced my mistaken understanding that the second mortgage was no longer a valid lien on my home following my bankruptcy discharge. 

I disputed this second mortgage and requested verification of the debt from XXXX on or about XX/XX/XXXX, but I did not receive any response until XX/XX/XXXX, when I received notice from XXXX that my home would be sold in foreclosure on XX/XX/XXXX. At this time I retained XXXX Legal Aid as counsel for help. 

In early XX/XX/XXXX, I communicated telephonically with SLS to ask if loss mitigation was available. I was chastised by a representative who told me that although I thought [ I ] would get away with not paying [ my ] debts, now I would lose my home. The representative eventually agreed to submit a request for loss mitigation and told me that this would pause the foreclosure process. XXXX subsequently confirmed to my counsel that the XX/XX/XXXX foreclosure sale had been canceled. 

A XX/XX/XXXX payoff statement from XXXX states that, in addition to a principal balance of {$19000.00}, SLS and the owner of the debt, XXXX XXXX XXXX XXXX XXXX ( " XXXX '' ), are also demanding payment of more than {$33000.00} in interest and fees, with interest accruing at the rate of 11.6 % for the past 12 years, most of which time I was not receiving any correspondence at all about the loan. I have attached a copy of the payoff statement as Exhibit A. 

On XX/XX/XXXX, my counsel sent a Qualified Written Request ( " QWR '' ) under the Real Estate Settlement Procedures Act ( " RESPA '' ) to SLS ( attached as Exhibit B ), and a demand letter to MRLP ( Exhibit C ). 

Specific deficiencies identified in the QWR include : **Improper charging of interest for time periods when no periodic mortgage statements or other required notices were being sent concerning the loan. ** SLS and XXXX are not entitled to retroactively demand strict compliance on the payment terms for periods of time when no lender or servicer was communicating with me about the loan. Under Georgia law, O.C.G.A. 13-4-23, where, as here, the nonperformance of a party to a contract is caused by the conduct of the opposite party, such conduct shall excuse the other party from performance. Because no correspondence was being provided to me to notify me as to where payments should be sent or the amount of the payment, this conduct caused me not to be able to make payments on the loan, or pursue other options I might have had with regard to the loan, and excuses me from performance on the loan during such time period. Following a mutual departure from the contract such as this, SLS and XXXX may now demand payments going forward, but are not entitled to interest and fees retroactively during the extended period when no statements or correspondence were being sent. 

Furthermore, the Truth in Lending Act ( TILA ), and RESPA impose requirements and standards that investors and servicers must follow in providing required notices to mortgage borrowers. These requirements were not met in the handling of my account. 

TILA places an affirmative duty on the creditor, assignee, or servicer of a residential mortgage loan to provide periodic statements to the borrower, for each billing cycle, containing specified, detailed information regarding amounts owing under the mortgage loan. There is an exemption from the periodic statement requirement for loans that have been charged off, provided that no additional fees or interest will be charged on the account. I did not receive a periodic statement for my second mortgage loan from either the creditor, assignee, or servicer of the loan, for an approximately XXXX time period, and it was impermissible for any interest or fees to be charged during that time. 

When a loan is sold, assigned, or transferred, TILA also requires that the new owner of the loan provide notice to the borrower within 30 days of the assignment. Similarly, when the servicing of a mortgage loan is transferred, RESPA requires that the transferor and transferee servicers must each send notice at least 15 days before and no more than 15 days after the servicing transfer, respectively. I never received any such transfer of ownership notices concerning the second mortgage. I did not know where the loan had gone or where I should be sending payments. 

For violations of TILA and RESPA a borrower is entitled to recover actual damages, statutory damages, and attorneys fees. My actual damages include the accrued interest and fees I am now being charged for the extended time period when neither the lender ( s ) nor the servicer ( s ) of my second mortgage loan sent statements or notices despite being required to do so under federal law. My damages also include significant emotional distress from suddenly receiving a notice and payoff demand for over {$33000.00} in retroactive interest and fees, after having received no correspondence about the loan for such an extended period of time, and then being scheduled for foreclosure of my home and loss of my equity in order to collect on the over-inflated balance being claimed. 

**False, deceptive, and misleading representations in violation of the Fair Debt Collection Practices Act** The Fair Debt Collection Practices Act ( FDCPA ) prohibits a debt collector from using any false, deceptive, or misleading representation or means in connection with the collection of a debt. To the extent that SLS is a debt collector under the FDCPA, asserting that accrued interest is owed for a 12 year time period when neither the servicer ( s ) nor lender ( s ) were sending statements or notices to me, in violation of the express requirements of TILA and RESPA, is an inherently deceptive and misleading representation that violates both the general standard of FDCPA and also a specific provision prohibiting the use of deceptive means to attempt to collect a debt. SLS may be liable to me for actual and statutory damages, as well as attorneys fees, for these violations of the FDCPA. 

I disputed this second mortgage and requested verification of the debt from MRLP on or about XX/XX/XXXX, but I did not receive any response other than a foreclosure notice. The FDCPA requires that SLS cease all collection activity until written verification of the debt has been provided to me. A foreclosure sale can not proceed prior to sufficient written verification being provided ( including the documents requested in the QWR ). 

**Violation of the Georgia Fair Business Practices Act** The conduct by SLS and XXXX described above is both unfair and deceptive. Attempting to collect interest and fees for a period of at least 12 years when I did not receive any periodic mortgage statement from either the servicer or lender for my second mortgage loan, nor any other communication from the servicer or lender of my loan, is inherently both unfair and deceptive. Had I been provided with periodic statements and notices for my second mortgage loan during that XXXX timeframe, I could have made monthly payments on my second mortgage loan as those payments came due, pursued loss mitigation, or otherwise pursued legal rights concerning the account, and I would not now be faced with an asserted total payoff of over {$53000.00} on an actual principal balance of {$19000.00}. SLS and GHICs unfair and deceptive conduct entitles me to seek actual damages, treble damages, and attorneys fees under the Georgia Fair Business Practices Act.

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