Consumer complaint received 2020-11-23
Product: Mortgage — Conventional home mortgage
Issue: Struggling to pay mortgage — 
Company: SELECT PORTFOLIO SERVICING, INC. (CA)

BACKGROUND On XX/XX/2020, Select Portfolio Servicing ( SPS ) received an Assistance Review Application from borrower requesting a loan modification. On XX/XX/2020, SPS sent borrower a letter denying borrowers request for a loan modification. A true and correct copy of SPS XX/XX/2020 denial letter is attached. SPS explanation for denying borrowers request for a modification was that Under the servicing agreement governing this account, the requested assistance option is not available and SPS is unable to approve your request. 
On XX/XX/2020, borrower submitted an appeal of SPS denial of the modification application. The appeal requested that SPS provide the specific investor restriction precluding SPS from approving borrowers application for a modification. 
On XX/XX/2020, SPS denied borrowers appeal. A true and correct copy of SPS XX/XX/2020 denial of borrowers appeal is attached. In denying borrowers appeal, SPS repeated its initial response to borrowers request for a modification : Under the servicing agreement governing this account, the requested assistance option is not available and SPS is unable to approve your request. 
On XX/XX/2020 borrower sent SPS a Request for Information under 12 C.F.R. 1024.36. In the Request for Information, borrower asked SPS to provide the servicing agreement governing the account, including the specific investor restriction precluding a loan modification. 
On XX/XX/2020, SPS denied borrowers request for the servicing agreement and specific investor restriction precluding SPS from modifying the loan. A true and correct copy of SPS XX/XX/2020 response to borrowers RFI is attached. In denying borrowers request for the servicing agreement and specific investor restriction, SPS again repeated its initial response to borrowers first two requests for the specific investor restriction precluding modification. This time, SPS made the additional point that SPS is required to service its accounts according to the requirements of the noteholder, which may include limitations on modification characteristics. However, SPS did not provide borrower with the specific limitation which precluded loan modification in this case.

SPS Failed to Provide Borrowers with the Specific Requirement set by the owner or guarantor which precluded SPS from modifying borrowers loan. 

SPS has an obligation after evaluating a loss mitigation application to give a borrower written notice of its decision to deny any trial or permanent loan modification available to the borrower. Reg. X, 12 C.F.R. 1024.41 ( d ). SPS must give a borrower notice in writing of its decision on the borrowers eligibility for all trial or permanent loan modification options available to the borrowers. Reg. X, 12 C.F.R. 1024.41 ( c ) ( 1 ) ( ii ), 1024.41 ( d ). This written denial portion of the 1024.41 ( c ) ( 1 ) ( ii ) evaluation notice must state the specific reasons for the servicers denial of any modification option and, if applicable, that the borrower was not evaluated on other criteria. Id. ( emphasis added ). If a reason for denial was a requirement set by an owner or assignee of the loan, the notice must identify the owner or assignee and the specific requirement that was the basis for the denial. See Official Interpretations to Reg. X, 41 ( d ) ( 1 ) -1. ( emphasis added ). A mere statement that a loan modification option is denied based on an investor requirement, without additional information specifically identifying the relevant investor or guarantor and the specific applicable requirement, is insufficient. Id. ( emphasis added XXXX. 

Here, borrower submitted a loss mitigation application which was denied on the grounds of investor restrictions. Borrower appealed the initial denial, and asked SPS to provide the specific investor restriction precluding a modification, as SPS is required to do under federal law. In denying borrowers appeal, SPS stated that it had not been provided any detail as to the specific error it had committed in denying the application. On the contrary, in the appeal, borrower had identified SPS specific error in denying the modification request : SPS failure to provide the name of the investor and specific investor restriction which precluded SPS from modifying borrowers loan. 
When borrower again asked SPS to provide the specific investor restriction through a formal Request for Information, SPS parroted its vague and perfunctory explanation that it was under a duty to enforce investor restrictions, leaving borrower without a concrete understanding as to why the request had been denied, other than that the investors did not want to approve it, and failed to provide borrower with a meaningful opportunity to evaluate the options moving forward.