Consumer complaint received 2023-10-16
Company: SELECT PORTFOLIO SERVICING, INC.
State: VA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Struggling to pay mortgage
Sub-issue: Trying to communicate with the company to fix an issue related to modification, forbearance, short sale, deed-in-lieu, bankruptcy, or foreclosure

Complaint:
In summary, Select Portfolio Servicing is attempting to foreclosure on XX/XX/XXXX, despite me applying for mortgage assistance. On XX/XX/XXXX I applied for Deed in Lieu with a complete application. SPS responded by telling me I was not eligible for any assistance but gave absolutely no explanation why they could not even review it. They also responded with a new noteholder, without giving me any info on who this new noteholder is. Actually, they recorded a substutee trustee, who has scheduled the foreclosure sale, but under the old noteholder name, when the name has changed. 

I am in receipt of the XX/XX/XXXX, mortgage statement that reflects {$7500.00} for other charges and fees. As Im sure SPS is aware, RESPA prohibits charging borrowers 3rd party fees if the work if not actually performed or if the fees/costs are not allowed pursuant to the mortgage documents. Specifically, 12 C.F.R. 1024.35 ( b ) ( 5 ) requires that the servicer may only charge bona fide fees ; fees that the servicer determined it had a reasonable basis to impose which are fees where the servicer actually made the payment and fees that are allowed pursuant to the Deed of Trust. However, a servicer may not charge a for service that a service provider did not actually provide or that it did not pay or is prohibited from being assessed pursuant to state/federal law or the Deed of Trust . Therefore, I request SPS provide me an itemization of the {$7500.00} in other charges and fees as well as documentation to support that this is a bona fide fee pursuant to RESPA. 

SPS, in your XX/XX/XXXX, letter you claim that the owner/secured party of my loan is XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX as Trustee, as successor-in-interest to XXXX XXXX XXXX XXXX, as trustee , on behalf of the holders of the XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Asset-Backed Certificates XXXX XXXX XXXX. However, the Note that you included with your XX/XX/XXXX, letter contains no endorsements which means only the originator of the loan, XXXXXXXX XXXX XXXX and XXXX XXXX, has the legal authority to enforce the Note pursuant to the UCC. The claimed owner/investor does not have the authority to enforce the Note via a foreclosure action. 

SPS you claim via your recent letter and the letter dated XX/XX/XXXX, that we were not eligible for home retention options/loan modification. SPS claims we do not qualify for a SPS Trial Modification because you could not reduce the principal and interest payment, or the payment reduction achieved did not meet the payment reduction required for the account. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ( the Dodd-Frank 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 ] oss 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 borrowers property, then within 30 days of receiving the borrowers 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 servicers 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 ). 
The NPV Data Input Field Values provided by SPS failed to include all of the inputs including income. The only input included is that of property value. SPS declined to approve me for a SPS Trial Modification claiming that a payment reduction could not be achieved however no explanation was provided as to the required payment reduction. 
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 loan modification claiming a payment reduction could not be achieved, yet SPS failed to provide the NPV inputs other than the value of the property. SPS failed to state the program guidelines to include Debt to Income Ratio ( DTI ), availability to extend the term, lower the interest rate, etc. I can not effectively appeal a denial if I do not know the parameters and the inputs utilized. 
SPS failed to name the purported investor of my loan as required by 12 C.F.R. 1024.41 ( g ) ( 1 ). A denial for a loan modification ostensibly based on an investor restriction that does not name the investor or explain the restriction has been held to be insufficient. Nash v. PNC Bank, N.A. Civ. No 16-2910, 2017 WF 1424317, at *3 ( D. Md. April 20, 2017 ). SPS, you must provide the name of the purported investor of my loan as well as the specific investor restriction that prohibits the loan from being modified. 
Using the criteria from RESPA, Regulation X, and the CFPB, SPS had to do three things to properly deny my clients loan application. First, it had to identify the owner or assignee of the loan, which it did not do. Second, it had to identify the specific requirement that I did not meet, which SPS also failed to do. Third, it had to provide information and detail supporting its claim that my loan could not be modified, which SPS failed to do. SPS had to provide any underwriting guidelines or requirements or restrictions as well as the specifics utilized in calculating eligibility such as interest rate, term and DTI. Nash v. PNC Bank, N.A., CV TDC-16-2910, 2017 WL 1424317, at *4 ( D. Md. Apr. 20, 2017 ) ( denying defendants motion to dismiss RESPA Claim because the specific applicable requirement that was not met, the Court concludes that XXXX has adequately alleged that the Denial Letter 's explanation for denying his HAMP loan modification may lack the specificity required by 12 C.F.R. 1024.41 ( d ). ) SPS is obfuscating the reason for the denial by failing to provide to me any useful information that can be appealed. 
In XX/XX/XXXX, the Bureau issued several final rules to address the systemic problems in the mortgage servicing industry 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. 
Notably, under RESPA, [ l ] oss 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. SPS is a servicer pursuant to RESPA. 
CFPB regulations effective XX/XX/XXXX, as well as RESPA itself, require servicers, through amendments made by the Dodd-Frank Act, to take timely action to correct errors relating to avoiding foreclosure, suggesting that borrowers should be able to assert under RESPA errors related to loss mitigation. See 12 U.S.C. 2605 ( k ) ( 1 ) ( C ). Thus, CFPBs new provisions are relevant to this this Notice of Error, and pursuant to these new provisions, I request SPS process this Notice of Error as follows : The servicer must acknowledge receipt of a notice of error within five days ( excluding holidays, Saturdays, and Sundays ) after receiving the notice, rather than the twenty business day period under the former law. See Reg. X, 12 C.F.R. 1024.35 ( d ) ( effective Jan. 10, 2014 ). 

Alternatively, the servicer need not provide this acknowledgment or otherwise satisfy the compliance requirements if it corrects the error or errors asserted by the borrower, and notifies the borrower in writing of the correction, within the five business day period. 

See Reg. X, 12 C.F.R. 1024.35 ( d ) - ( f ) ( effective Jan. 10, 2014 ) 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 ). 12 U.S.C. 2605 ( i ). 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. Based on the representations made to me and the foregoing definitions, it is clear that SPS holds itself out as the servicer of my loan and that its activities with respect to the loan meet the definition of servicing. 
SPS is required to respond to and correct the above noted errors as it is a standard servicer duty. Under 12 U.S.C. 2605 ( k ) ( 1 ) ( C ) a servicer shall not fail to take timely action to respond to a borrowers requests to correct errors relating to allocation of payments, final balances for purposes of paying off the loan, or avoiding foreclosure, or other standard servicers duties. 
These errors on SPSs part must be addressed and reconciled immediately, specifically, pursuant to Regulation X, 12 C.F.R. 1024.35 ( d ) and ( e ), SPS has 5 days within which to acknowledge receipt of this request and must respond no later than 7 days. 
Until these errors are properly addressed and corrected by SPS, there can be no sale scheduled on our property ; the currently scheduled sale for XX/XX/XXXX, must be canceled if the errors are not corrected. See Reg. X, 12 C.F.R. 1024.35 ( e ) ( 3 ) ( i ) ( B ) and 1024.35 ( f ) ( 2 ) ; Official Bureau Interpretation, Supplement 1 to Part 1024, 35 ( e ) ( 3 ) ( i ) ( B ) -1. Therefore, we are requesting that you cancel the sale so that our concerns can be properly addressed. 

Be advised that RESPA and Regulation X provide a private right of action if a servicer fails to comply with the statute or regulation. 12 U.S.C. 2605 ( f ) ; 12 C.F.R. 1024.41 ( a ). I am a borrower entitled to the protections codified at 12 U.S.C.A. 2605 and 12 C.F.R. 1024.41. The mortgage loan subject to this action is a federally related mortgage as defined in 12 C.F.R.1024.2 and involves a consumer transaction at the time the loan was taken out by me. SPS is a mortgage servicer subject to the mandatory requirements of 12 U.S.C.A. 2605 and 12 C.F.R. 1024.41. 

I trust that SPS will comply with RESPA in responding to this letter.

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