Consumer complaint received 2023-04-10
Company: SELECT PORTFOLIO SERVICING, INC.
State: FL
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Trouble during payment process

Complaint:
Titled Property : XXXX XXXX, NY XXXX Acct : Select Portfolio Servicing - Mortgage Account # XXXX Address of Mortgage Servicer : Select Portfolio Servicing Inc., XXXX XXXX XXXX XXXX XXXX XXXX, UT, XXXX Complaint Summary : This complaint summarizes the circumstances surrounding the refusal by the current mortgage servicing company " Select Portfolio Servicing '' ( SPS ) to recognize the legal distinction of a " guarantor '' on a business mortgage product and its failure to thereby properly list and report the payments made by such business entity ( XXXX XXXX XXXX XXXX to the business credit bureaus. Instead the mortgage servicing company incorrectly lists the " guarantor '' on the mortgage " XXXX XXXX '' as a co-borrower, on the mortgage, thoughno co-borrower signature or relationship has been establishedin the mortgage documentation. 

The complainant ( XXXX XXXXXXXX ) also believes that SPS has likely violated several provisions of the Federal Trade Commission Act including but not limited to Section 5, regarding Unfair or Deceptive Acts or Practices, whereby SPS has caused and is likely to cause substantial injury to consumers and furthermore their actions can not be reasonably avoided by consumers. 
These include but are not limited to SPS actions in this matter when : a. SPS fails to acknowledge the legal distinctions/difference between a " co-borrower '' and " guarantor '' regarding security interests on a business mortgage product and thus failing to recognize that theproperty mentioned above is titled by XXXX XXXX XXXX XXXX a business entity registered in the state of FL & NY. Furthermore after several months of complaints to SPS, by the complainant, the company arbitrarily changed the erroneous status of XXXX XXXXXXXX from a " single borrower '' to a " co-borrower '', further complicating the issue and yet still failed to recognize that the the property is titled & deeded in the name of an LLC and as such also gives the LLC a vested interest in the property, since XXXX XXXX '' was only acting as a guarantor. SPS ignored the business security interest held by XXXX XXXX XXXX. 

b. Incorrectly reporting on mortgage documents and mortgage statements to interested parties, for the calendar period, XX/XX/XXXX thru XX/XX/XXXX that the mortgage account was in the name of an individualsole borrower " XXXX. '' when in fact the property was titled & recorded in the name " XXXX XXXX XXXX '' and as such did not have a sole borrower status or relationship.

c. Also, possible violation of Title VI of the Consumer Credit Protection Act, whereby SPS continuously reported to the credit bureaus ( i.e XXXX, XXXX, XXXX ) for the period XX/XX/XXXX thru XX/XX/XXXX, that the mortgage account was in the name of an individualsole borrower " XXXX  ". thereby ignoring the business interests of XXXX XXXX XXXX. which holds title for the property in question. Furthermore, when XXXX XXXX complained to the credit bureaus that the credit reporting information submitted by SPS was inaccurate, the credit reporting bureaus asked SPS to validate the information and on each occasion SPS failed to properly verify the information and instead " inaccurately submitted '' to the credit bureaus, that " XXXX. was the sole borrower on the mortgage account when no such fact was established as no " co-borrower '' or co-borrower signature line exists on the mortgage documents.

d. Possible violation of Title VI of the Consumer Credit Protection Act, whereby SPS arbitrarily and likely illegally changed, added and reported to the credit bureaus in XX/XX/XXXX that " A.F. '' had changed status from a " sole borrower '' to a " co-borrower '' on the mortgage account, when the mortgage documents did not specify any such " co-borrower '' signatures or agreement on the mortgage products and furthermore, ignoring the titled business interests of XXXX XXXX XXXX of which XXXX. holds the position of " managing member ''. 

e. The mortgage servicing company ( SPS ) did not report payments made by XXXX XXXX XXXX to any of the " business credit bureaus ''. 

" Adverse Impact & Standing : '' An act or practice is unfair where it ( 1 ) causes or is likely to cause substantial injury to consumers, ( 2 ) can not be reasonably avoided by consumers, and ( 3 ) is not outweighed by countervailing benefits to consumers or to competition. '' The basis for this complaint andpossiblefurther action, isthat Select Portfolio Servicing incorrect credit reporting, has caused a severe adverse impact in " XXXX '' ability to secure any substantial credit in his personal name for the period beginning XXXX XXXX XXXX & XX/XX/XXXX, XXXX XXXX. received two denials on a Home Equity line of credit application, primarily due to the incorrect reporting by SPS as the incorrect reporting had significantly impacted his debt toincome ratio being reported on his personal credit rating and thus making him " in-eligible '' for a Home Equity Line of Credit on his personal property. 

Resolution sought : a. Correcting of personal & business credit reporting Issue : Complainant " XXXX. '' who holds the title of " managing member '' of XXXX XXXX XXXX and is only acting as a guarantor for the XXXX XXXX XXXX mortgage loan, requests that the mortgage payments related to loan # XXXX should not appear on his personal credit report and all previously reported payment info should be removed and instead reported to the business credit report for XXXX XXXX XXXX. Furthermore, no information regarding this mortgage product ( Account # XXXX ) should be listed under the personal name of " XXXX. '' unless & only in the event that the titled entity & borrower " XXXX XXXX XXXX '' has legally defaulted on repayments.This fact recognizes that there exists a legal distinction between a co-borrower on a loan versus a guarantor, with the latter assuming the financial obligation of another party only in the event that the original party is unable to fulfill their obligation. 

b. Determine the adequacy of the SPS and interested parties, procedures, policies, and controls to ensureconsistent compliance with section 5 of the FTC Act. 

c.To determine if the SPSand interested parties, comply with section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices d.Provide complainant " XXXX. '' with the following documents/evidence as was previously requested in prior complaints made to the company in XX/XX/XXXX & XX/XX/XXXX requesting : 1. All non-confidential, non-proprietary, and non-privileged information containing the name " XXXX. '' or " XXXX XXXX XXXX '' relative to the transfer or servicing of this mortgage from XXXX XXXXXXXX XXXX XXXXXXXX to company ( Select Portfolio Serv ). 

2. All non-confidential, non-proprietary, and non-privileged information relied upon to inform the credit bureaus ( XXXX, XXXX, XXXX ) that the mortgage account referenced above was a personal account in the name of XXXX.. 

3. All non-confidential, non-proprietary, and non-privileged information relied upon to inform the credit bureaus ( XXXX, XXXX, XXXX ) that the mortgage account referenced above was not owned by " XXXX XXXX XXXX ''. 

4. Documents relied upon to substantiate the decision to have XXXX. removed as a " sole borrower '' and instead listed as a co-borrower. 

5. Documentation relied upon to substantiate any consideration/decision against having A.F. listed as a co-signer.

6. Documentation relied upon to substantiate the decision, to exclude XXXX XXXX XXXX from being listed as the sole primary borrower on the account. 

7. Explanation of what State ( i.e NY, FL, UT ) or Federal law is being relied upon to inform SPS decision to have XXXX. listed as a co-borrower on this mortgage? 


Factual Background : In XXXX of XXXX, XXXX XXXX XXXX, a business entity in the state of NY of which complainant XXXX. is a managing member, initiated the purchase/refinance of a property in New York located at XXXX XXXX  XXXX, NY XXXX XXXX 
The property was titled & deeded & filed in the name of the XXXX ( XXXX XXXX ) in XXXX XXXX NY. Furthermore, since this was the first property purchase of XXXX XXXX XXXX, the original mortgage company XXXX XXXX XXXX Mortgage XXXX ) requested that XXXX. agree to act as a " guarantor only '' on the purchase of XXXX XXXX XXXX, in which he is also a managing member. 

In approximately XXXX of XXXX, XXXX. was notified that the mortgage was sold from XXXX XXXXXXXX XXXX XXXXXXXX to Select Portfolio Servicing and XXXX. was surprised when he started receiving notices in his " personal name '' with information stating that that the Mortgage Servicer was changed to ( SPS ) Select Portfolio Servicing and payments would have to be made to them as such beginning on or around XX/XX/XXXX. Complainant ( XXXX. ) notified Mortgage Servicer ( SPS ) via electronic communications, phone & email, that the property was owned by XXXX XXXX XXXX and as such, communications, including statements & credit reporting should be disseminated in the name of the business and not in the personal name of the managing member " XXXX ''. 

After several calls to XXXX XXXXXXXX XXXX XXXX, XXXX. was notified that the reporting error was with SPS and not XXXX XXXX. XXXX XXXX XXXX loan personnel even attempted to have SPS rectify the incorrect reporting but SPS refused to change. 
Beginning in XX/XX/XXXX and after several months of back and forth calls & complaints to the SPS customer service & ombudsman team, on or around XX/XX/XXXX, SPS provided written communication that an updated decision was made to change " XXXX. '' from the sole borrower to a " co-borrower, though no such legal relationship had been designated. Furthermore, SPS closed the case with no further action being deemed necessary, thus not addressing the interests of both XXXX, complainant and XXXX XXXX XXXX, the business interest.

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