Consumer complaint received 2023-07-20
Company: Specialized Loan Servicing Holdings LLC
State: HI
Product: Mortgage
Sub-product: Other type of mortgage
Issue: Struggling to pay mortgage

Complaint:
My initial ARM loan was issued in XXXX by a XXXX XXXX XXXX and set at 3.125 % per annum. This ARM has been sold twice, the first time to XXXX XXXX ( Texas ) a proper bank, then in the first quarter of XXXX, it was sold to what seems to be a collection company ( Colorado ), named Specialized Loan Services LL ( SLS ). I initially contacted them and they informed me they weren't a bank and that they would soon be increasing the mortgage because it expired. In checking online SLS has earned a bad reputation with borrowers, they appear to operate like an industrial loan bank that engages in controversial and possibly illegal practices. In old times, these entities were called loan sharks. 

I then received a notice from SLS this past Spring that with LIBOR being abandoned by lenders they are going to establish a new interest rate. About a month ago they notified me that my new rate, starting in XX/XX/XXXX, is increasing by more than XXXX XXXXXXXX, this will make it unaffordable to me and my Family. 

SLS didn't state the new interest rate this new payment was calculated on, it seems to be a violation of usuary practices. In reviewing the CFPB website, it instructs that lenders in switching from ARM ( variable rate mortgages ), must set the new rate close to what it was when LIBOR was changed this new benchmark is referenced in the BFPB site as " SOFR. '' I've pasted a copy of a fact sheet I sent to my Congressional Representative XXXX XXXX asking him for assistance with this. 

Problems with Specialized Loan Services ( SLS ) Doesnt appear to a regular mortgage bank lender Online reviews of SLS by customers are substantially derogatory many appear to complain about excessive charges and unethical/predatory practices. 
They dont provide proper notices when it raises interest rates, this practice alone may be an attempt by SLS to lead borrowers to default of some kind. 
My mortgage was originally with XXXX XXXX XXXX  Texas ( XXXX XXXX XXXX ), a standard mortgage bank. It was a variable rate mortgage set at 3.125 % interest charge. Unfortunately XXXX XXXX sold my loan to SLS, seemingly a predator probably buying all such loans and increasing rates to profiteer in this post Covid-19 era. Of course, the borrower ( myself ) has no control if the original lender sells your loan however in my case, the move has set the stage for SLS profiteering by jacking up rates in concert with actions by the Federal Reserve Bank. A major reason for this rate change is the abandonment of LIBOR indices to establish interest rates, Issue : It seems SLS is attempting to charge exorbitant rates that progressively commence this month ( XX/XX/XXXX ) and into XX/XX/XXXX. The XXXX increase is intended to increase my monthly payment by over XXXX XXXXXXXX. At this rate I will be forced to sell this house where me and family have lived for over 20 years. 
I contacted the DC based US Consumer Financial Protection Bureau ( USCFPB ) and will file a formal complaint with them by next week. Based on XXXX XXXX Bank published information they state the LIBOR settings will switch to a synthetic methodology, based on XXXX XXXX Term SOFR rate and the relevant ISDA fixed credit spread after XX/XX/XXXX. The XXXX has indicated that the synthetic 1, 3 and 6 month USD LIBOR settings will be published for 15 months, and so permanently cease at the end of XX/XX/XXXX. This is so confusing for the average borrower to comprehend and even appreciate. I discussed the rate increase and monthly payment impact, preliminarily they felt the increase was quite excessive and in possible breach of certain of the limits set forth in the SOFR terms. They will review this when I file a formal complaint shortly. 
USCFPB Website : The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive.

Excerpt from USCFPB Website Page : Lenders must use indexes similar to LIBOR as replacements In general, lenders and servicers for consumer loans are required to choose a replacement index that is comparable or substantially similar to LIBOR. For adjustable-rate mortgages and private student loans, many lenders have announced a transition to rates based on the Secured Overnight Financing Rate, which are also called the IBOR Consumer Cash Fallbacks. For credit cards and home equity lines of credit, many lenders are selecting the prime rate as the replacement index. Both these choices comply with CFPB rules that apply to the transition away from LIBOR.

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