Consumer complaint received 2019-03-13
Company: SELECT PORTFOLIO SERVICING, INC.
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
SPS 2nd : XXXX XXXX XXXX XXXX XXXX XXXX XXXX CA XXXX XXXX XXXX XXXX XXXX Before we begin it is important to note that SPS services both the 1st and 2nd loans on this property, and that they belong to different investors, with differing guidelines, that are in conflict with one another. This creates many problems when it comes to short sales, or any other type of negotiation, as they can not best protect either investor in a situation where the demands from each investor require the other to lower their net proceeds. SPS does not allow a prospective buyer to bring in additional monies to satisfy a demand from a junior lien holder, and in the State of California, a seller is never allowed to contribute any monies to satisfy demands. So that means the offer on the table is the only amount of money we have to work with to satisfy all liens on a property. 

The time line below shows the level of gross incompetence and possible purposeful negligence of the underwriting department in the review for loss mitigation on BOTH loans for this property. I have highlighted with *** the particularly problematic issues and communications. They have 2 sets of rules that are in direct conflict with one another. They should have known that there was no way for them to work out this loss mitigation file. 

XX/XX/XXXX Submitted to SPS offer was {$430000.00} XX/XX/XXXX Got value back of XXXX. We were asked to increase the net but not told what they required. 

XX/XX/XXXX Called the SPS Ombudsman to see if they could find out what the minimum required net is, and they were unable to tell me. 

XX/XX/XXXX - We sent market comps and an inspection report to support our offer of XXXX. 

XX/XX/XXXX Rep at ombudsmans office said we were about 6k off minimum net required. We revised the HUD to reflect an increase to the net proceeds to the 1st trust deed by XXXX and sent that back to SPS XX/XX/XXXX Per Ombudsman, no response to our higher net. 

XX/XX/XXXX Called ombudsman, no response. Ombudsman sent message to underwriting to please get response XXXX Per the Ombudsman, underwriting somehow managed to close the review on XXXX yet the ombudsman never got notice of that, and wasn't apparent in the database. Instead, underwriting approved the XXXX 's for a repayment plan. The ombudsman can do NOTHING until one of the XXXX 's call in to decline that repayment on a recorded line. they can call the ombudsman to do so, to make sure it gets done right. we need to send all short and offer docs again to both XXXX and XXXX along with a letter requesting rush review due to us thinking we were in review for an entire month and no one ever told us we weren't. 

XX/XX/XXXX Resubmitted entire file and the homeowner called the ombudsman to decline payment plan that was never requested. 

XX/XX/XXXX Per XXXX in the Ombudsman department, the underwriter on the 1st denied the offer again wanting a further increased net. Yet again, they refused to provide us what net they wanted, making this a very frustrating guessing game for the buyers and the sellers. 

XX/XX/XXXX We increased the net again, and resubmitted the new offer. 

XX/XX/XXXX Underwriting for the 2nd demanded a corrected RMA and we sent that back on the same day XX/XX/XXXX Ombudsman told us that both loans were active in short sale review. 

XX/XX/XXXX We were told it looked like the 1st and 2nd were negotiating between each other and to expect decision by XX/XX/XXXX. 

XX/XX/XXXX Finally got word that the investor for the 1st Trust Deed approved the short sale and that now the file can go to the investor to the 2nd for approval. As is normal for ALL short sales we do with SPS, the net to the 2nd was {$8500.00}. It is important to note here, that SPS never allows more than XXXX to go to a junior lien on any short sale, except in some GSE situations where the guidelines state the maximum is XXXX. We were told by SPS that they had internally approved the 2nd and just needed investor signoff. 
XXXX We were now told that the 2nd is requiring no less than 25,000 to approve the short sale, on a loan of XXXX. This is where the conflict of interest comes into play when the same company is servicing the 1st and 2nd for different investors. In NO short sale would SPS ever allow 30 % of the UPB to go to a 2nd when the 1st is still short. We were asked to revise the HUD showing XXXX to the 2nd. At that point I informed the Ombudsman that I believe we would then have a problem with the 1st, as we had already been fighting over meeting their net proceeds and per their investors policy of not allowing any 3rd party including the buyer or agents to contribute to satisfy junior liens, and the State of Californias law that sellers may not contribute in a short sale, this would then result in a substantial decrease to the net on the 1st. Ombudsman still asked us to send the HUD showing increased net to the 2nd, and decreased net to the 1st. We sent it same day. 

XXXX Ombudsman confirmed receipt of new HUD and attached it to both accounts. 

XXXX Ombudsman escalated issue again for resolution on the issues with both the 1st and 2nd nets. 
**** At this point I started calling twice a day for updates**** XX/XX/XXXX Still nothing back explained to ombudsman that based on the 1st TD approval letter and the verbal that the 2nd had been internally approved, that the buyer started working on their loan. Now their rate lock is expiring and asked them to please escalate again. Was told that they would attempt to escalate this to the highest level of management to get it going. Was also reassured that the issues for the 1st and the 2nd were escalated and tied together. 

XXXX Was told investor for 2nd has approved the file, but it needed to go through QC and there was nothing they could do regarding the net issues for the 1st until the letter for the 2nd had been issued even though we had been told repeatedly that they were escalated TOGETHER. 

XX/XX/XXXX Was told that the ombudsman had this escalated to the highest level and they send a message to find out what was taking so long. 

XX/XX/XXXX. Was told by ombudsman department that it had notes in the system for the 2nd from the 8th that it was being worked on by XXXX. 

XXXX Was told by ombudsman that this had only been sent to QC on the XXXX. We asked how that could possibly be the case and referenced our previous notes, we were then told it had failed QC on the XXXX but there were no notes as to why and that it was sent back to QC on the XXXX and escalated again. 

XXXX. Was told that the 2nd TD NEVER SENT THE FILE TO THE INVESTOR. They had NO EXPLANATION about all the times I was told it was approved and the approval letter was in the QC department. At this point it is obvious that we have been lied to throughout the entire process with SPSs 2nd TD department. ************Keep in mind we started this short sale with SPS on XX/XX/XXXX, so we have been LIED TO FOR OVER FOUR MONTHS. They have harmed not only their own investor ( s ) and their borrower, but also the buyer as they are preventing them from finding another property in this difficult market. 

I want SPS fined to the maximum amount allowed by law, I want the conflict of interest investigated and I want the short sale approved AS IT STANDS for both the 1st and the 2nd liens and I want SPS to be required to make up the difference for their investors.

**See attached 1st TD Approval Letter.

CC : US Ho
use Committee on Financial Services Chairwoman XXXX XXXX.

Attorney General XXXX XXXX

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