Consumer complaint received 2023-10-18
Company: Specialized Loan Servicing Holdings LLC
State: CA
Product: Debt collection
Sub-product: Mortgage debt
Issue: Took or threatened to take negative or legal action
Sub-issue: Seized or attempted to seize your property

Complaint:
Specialized Loan Servicing LLC ( SLS ), is in violation of my HELOC Agreement ( see attached ). The company stayed dormant, for almost 10 years, while the house was upside down. Now, SLS threatens foreclosure on a " zombie mortgage, '' which is evidenced by not only my case, but also the cases recorded in the news, and in CFPB 's Consent Order, Settlement, and Guidance document, all attached to this complaint. 

Link here ( dated Monday, XX/XX/XXXXXXXX  XXXX ) : " What is a zombie mortgage? Couple facing foreclosure because of XXXXzombie ' loan | What to know '' XXXX XXXX XXXXXXXXXXXXXXXXXXXX/ Link here ( dated XX/XX/XXXXXXXX  ) : " Zombie Mortgages Could Force Some Homeowners Into Foreclosure '' XXXX XXXX XXXXXXXX Link here ( Filed XX/XX/XXXXXXXX   ) : UNITED STATES OF AMERICA BUREAU OF CONSUMER FINANCIAL PROTECTION ADMINISTRATIVE PROCEEDING File No . XXXX XXXX XXXX XXXX XXXXXXXX  Link here ( dated XX/XX/XXXXXXXX    ) : " Consumer Financial Protection Bureau Settles with Specialized Loan Servicing , LLC '' XXXX XXXX XXXXXXXX Link here ( dated XX/XX/XXXXXXXX  ) : " CFPB Issues Guidance to Protect Homeowners from Illegal Collection Tactics on Zombie Mortgages '' XXXX XXXX XXXXwww.consumerfinance.govXXXX Namely, the " CFPB Issues Guidance to Protect Homeowners from Illegal Collection Tactics on Zombie Mortgages, '' like SLS. Specifically, the CFPB specifically states, " Now, over a decade later, and often without any intervening communication with homeowners who were able to save their homes, some of these debt collectors are demanding the mortgage balance, interest, and fees, and threatening foreclosures on families who do not or can not pay '' ( see attached ). 

SLS is using this same tactic against me today. 

Link here ( dated XXXX XXXX, XXXX  ) : XXXX XXXX XXXX/www.consumerfinance.gov/XXXXXXXX/cfpbXXXXXXXX/ Debt collectors now attempting to collect on these " zombie second mortgages '' may be in violation of the Fair Debt Collection Practices Act. 

For ~10 years, SLS failed to send me statements and updated balances on my mortgage account while there was no equity in my home. 

Now, however, that my house has accumulated equity, SLS shows up to FORECLOSE on my property. 

The FORECLOSURE DATE is XX/XX/XXXX. 

Through these patterns, it is clear that SLS demonstrates and operates on predatory and deceitful business practices that violate the law, as supported by the CFPB 's Consent Order, Settlement, and Guidance documents ( all attached ). Specifically, I would like to draw your attention to the recent XX/XX/XXXX Consent Order issued by the Consumer Financial Protection Bureau ( CFPB ) against SLS, which found that SLS violated the Real Estate Settlement Procedures Act ( RESPA ), its implementing regulation, Regulation X, and the Consumer Financial Protection Act of 2010 ( CFPA ). 

According to the consent order, SLS took prohibited foreclosure actions against mortgage borrowers who were entitled to protection from foreclosure, and failed to send or to timely send evaluation notices to mortgage borrowers who were entitled to them. 

This is exactly what happened in my case. 

Moreover, " The Bureau found that in some cases, SLS obtained foreclosure judgments and conducted foreclosure sales on borrowers ' homes when Regulation X would have entitled the borrowers to protection from foreclosure had SLS complied with that rule '' ( see attached ). 

" As a result of these violations, SLS was ordered to pay {$770000.00} in monetary relief to consumers, waive {$500000.00} in borrower deficiencies, pay a {$250000.00} civil money penalty, and implement procedures to ensure compliance with RESPA and Regulation X '' ( see attached ). 

To highlight, Specialized Loan Servicing ( SLS ) LLC failed to comply with the terms of my Home Equity Credit Line Agreement ( HELOC ), specifically Section 4.b., which requires the lender to send regular statements regarding my balance ( see attached ). Specialized Loan Servicing LLC not only failed to contact me, but failed to do so for a period of ~10 years, during which I received no such statements, leading to misinformation about my loan and significant financial stress today. 

Specifically, Regulation X requires that " servicers provide written notice to borrowers at certain times during the life of the loan, including at least once a month for borrowers with variable-rate mortgages with monthly adjustments or other loans with payments that can change. The notice must include a statement of the account that includes the amount due, the due date, and the breakdown of payments, including the amount applied to principal, interest, and escrow, if applicable '' ( see attached ). 

The lender 's disregard for the HELOC for over 10 years and their failure to contact me during a period when my house was " upside down, '' only to threaten foreclosure if a lofty down payment is not made towards an accrued interest balance of over {$230000.00} on an original loan balance of only {>= $1,000,000}, is unreasonable and has unethically, unfairly, and unjustly put my home at risk. 

Based on the available information, the CFPB 's Consent Order against SLS in XX/XX/XXXX is one of the most significant legal actions taken against SLS in recent years. This order provides a clear and documented case of RESPA violations and highlights SLS 's history of engaging in predatory and deceptive business practices, which is proven by the settlement SLS had to pay to the CFPB. 

In addition to the Consent Order, there have been several consumer complaints and legal actions against SLS in various states, including California. 

Based on these examples, it is clear that SLS has a history of engaging in unlawful and predatory practices ( words specifically used by the CFPB ), and it is not uncommon for consumers to experience difficulties when dealing with the company. 

Given the recent consent order issued by the CFPB, it is clear that SLS has a history of violating consumer protection laws. I urge you to take action to hold SLS accountable for its violations and ensure that consumers are protected from these types of abusive practices in the future. 

A postponement of the foreclosure sale date, which is currently set as Thursday, XX/XX/XXXXXXXX  is necessary to provide an opportunity for both parties to negotiate feasible terms and for SLS continued RESPA and consumer protection violations to be addressed.

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