Consumer complaint received 2023-08-08 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Trouble during payment process — 
Company: Specialized Loan Servicing Holdings LLC
State: CA

Complaint narrative:
This complaint is the third regarding this loan that I have filed with the CFPB, The prior two complaints - XXXX in XXXX and XXXX in XXXX- have led to the suspension of foreclosure. but have not resolved the problems with my mortgage servicer, SLS. This case has been going on for 14 years stemming from my XXXX XXXXXXXX Bankruptcy Plan of Reorganization, approved XX/XX/XXXX. I repeat : 14 years, 4 attorneys, 3 foreclosure attempts by the servicers. This is absolutely a disgrace and has cost me a fortune in legal fees and taken a toll on my emotional and physical health. 

The situation over the intervening 14 years is that XXXXXXXX XXXX, and then the successor servicer SLS Mortgage, is still refusing to follow the XXXX XXXX plan of reorganization set out by the Bankruptcy court on XX/XX/XXXX, now almost 14 years to the date since the court approved the Reorganization Plan. 

Briefly, in the reorganization plan the court approved a cramdown on the property from a loan balance of {$680000.00} to {$460000.00}. This was based on the appraisal submitted to the court on XX/XX/XXXX by XXXX itself. The court ruled the difference between the amount owed on the original note and the appraisal would be converted to non-secured status and would be paid at the same rate of payoff as other unsecured debts. This is called a deficiency judgment, and it converts any principal above the cramdown amount to unsecured status, just like all other unsecured debt. Once the debtor makes what are called 'deficiency payments '' on the unsecured debt, the debt is discharged. I did make all my deficiency payments on my unsecured and my bankruptcy case was closed in XXXX. 

XXXX and SLS for many years have refused to acknowledge this cramdown, and have refused to accept my deficiency payments, all of which were tended before XXXX and refused by XXXX. It must be noted that when XXXX refused all of my deficiency payments, the last for {$4100.00} which was tendered XX/XX/XXXX, under bankruptcy law and the Universal Commercial Code, any returned legally tendered payments are forfeit forever if they are returned. As a result XXXX forfetied the payments, but the deficiency payment threshold was met and the deficiency judgment was discharged with my closed bankruptcy, so the principal on the property became exactly {$460000.00}, just as the bank presented in their appraisal to the court.

SLS asserts they have accepted the cramdown, but in fact in the paperwork they submitted masquerading as a payoff in their XXXX foreclosure attempt they treated the difference between the cramdown and the original loan amount as 'deferred principal '' and included nearly {$300000.00} as " deferred principal '' in the payoff. That is not the case under the law. The cramdown converted the difference between the loan amount owed and the new value established by the bank 's appraiser to unsecured debt. I have provided XXXX and SLS both with all copies of the returned payments. With the final deficiency payment tendered on XX/XX/XXXX the deficiency is now paid off and the deficiency is wiped out. This was so noted when my bankruptcy was closed in XXXX. 

Also, as part of the plan and the cramdown of the principal loan value to {$460000.00}, my payments were reduced. As a result of the approved plan my monthly payments were reduced to {$2500.00} a month for three years at 6 percent. In XX/XX/XXXX- a month earlier than the court required - I began submitting payments to XXXX, starting with a cashiers check. XXXX accepted my payments until XXXX of XXXX. Starting with that check dated XX/XX/XXXX XXXX started refusing and returning every payment i sent for 3 1/2 years, in violation of the XXXX  XXXX plan. My attorney of record at the time, XXXX XXXX, sent XXXX a letter informing them they were in contempt of the approved Plan in XX/XX/XXXX, but XXXX continued to refuse my payments for the next 3 1/2 years, returning each interest payment and deficiency payment with a letter from XXXX. All payments were sent certified/return receipt, and I have repeatedly provided SLS with copies of all returned payments on XXXX  stationery along with proof of mailing and receipt. XXXX sent a letter along with each returned payment saying the payments were refused because they " do not represent the total due on your account. '' All three foreclosure attempts have been made on the basis of a flawed and illegal understanding of bankruptcy law, for the last 14 years. I tendered all my interest and deficiency payments on time, and the servicers have simply chosen to ignore the cramdown to a loan value that they offered the court in an appraisal in XX/XX/XXXX. 

On XX/XX/XXXX SLS filed a new notice of default and instituted foreclosure proceedings against me for the second time ( their second since they filed an NOD in XXXX in which the CFPB interceded and the foreclosure was canceled, and the third NOD on this loan when you include the XXXX foreclosure attempt by XXXX which resulted in my first complaint to the CFPB on this loan. ) My current attorney has been in communication with SLS ' attorney of record in this case, and they - contrary to legal procedure- insist we deal directly with SLS. As a result we have been communicating with SLS but they are refusing to acknowledge any responsibility or knowledge of the previous servicer 's actions, in defiance of all settled law that the current servicer inherits all the obligations and legal decisions, settlements, etc. that the previous servicer entered into or was subject to. 

SLS is concurrenty asserting that I am bound by the terms of the original note from XXXX despite the intervention of the Bankruptcy Court and the new terms approved in the Plan of Reorganization approved XX/XX/XXXX. SLS is thus saying I owe all the money that XXXX returned. SLS supposedly reached out to XXXX for a payment history, but XXXX sent an incomplete history because of computer problems. XXXX also was unable to provide a complete payment history in response to a letter from then attorney of record XXXX XXXX in XXXX, stating in a letter dated XX/XX/XXXX that XXXX did not have complete records of my payment, and that a followup letter would be sent It was never forthcoming. 

Based on incomplete records, and not withstanding the multiple times I have provided evidence of my payments to XXXX, SLS says I owe the refused payments because XXXX has provided them an incomplete payment history. They are saying absence of evidence is evidence, despite the fact we have provided SLS documentation of all proffered payments and their return by XXXX. SLS insists we owe the money since XXXX of XXXX, despite the evidence that we provided to them that the payments were made and refused by XXXX. 

SLS also asserts that they are not bound by the XXXX XXXXXXXX ruling since they were not party to the lawsuit. Oddly enough, they do cherry pick parts of the recorded re-organization plan- they acknowledge there was a cramdown, but they are calling the deficiency judgment " deferred principal. ' THIS IS NOT WHAT A DEFICIENCY JUDGMENT IS. The deficiency was converted to unsecured status and discharged with my final deficiency payment of {$410000.00} by check XXXX to XXXX of XX/XX/XXXX. XXXX returned this payment, which by Bankruptcy code and UCC meant they refused and forfeited the payment, but, since the payment was tendered, the deficiency was discharged and uncollectable. This was all memorialized when my Bankruptcy was closed iin XXXX, having met all obligations according to the Plan. 

SLS is also picking out of the Plan that I was to refinace the loan three years after I started making the court approved payments. Of course, I had planned to abide by this but since XXXX refused my payments and reported me as late to the credit bureaus -which was in violation of the FCRA because I in fact tendered all my payments as per the Plan. XXXX 's erroneous negative credit reports also resulted in me not being able to refi another commercial loan I held because my credit was ruined, and XXXX XXXX  did a voluntary foreclosure on my building. I was current on that building 's loan, held by XXXX XXXX but could not meet the re-fi requirments because XXXX and XXXX were both reporting me as late to the credit bureaus, thus ruining my credit. This resulted in me losing over {$1.00} XXXX in equity I have lost had I been able to keep that building. 

In summation, SLS has reviewed the Bankruptcy Plan which they assert they are NOT bound by and come away with an illegal interpretation of cramdown law thinking it has converted to deferred principal instead of being wiped out, and assert I did not do the refi at three years according to the plan. Somehow SLS has overlooked the court-approved payment of {$2500.00} a month which is included in the same paragraph of the reorganiztion Plan.. Of course the Plan did not foresee that XXXX, and now SLS would completely flout Federal Bankruptcy Law. 

So here we are 14 years after my bankruptcy plan of reorganization was approved and I abided by all the terms of the Plan, but XXXX, and now SLS have ignored the Plan for 14 years. All my payments were made according to the Plan, and evidence of every payment was provided to SLS. 

It is my understanding that SLS is under a consent decree with the CFPB ( Consumer Financial Protection Administrative Proceeding File No. XXXX XXXX ) to take affirmation actions to resolve outstanding mortgages. Clearly SLS has played fast and loose with the law, and they had done so with me since XXXX when they took over servicing my loan. It is clear they are making no effort to resolve my mortgage issues, and in fact are making misleading, illegal, and inaccurate assertions regarding my loan and their responsibilities and obligations under the law, including their obligation viz. the previous servicer in an effort to execute an illegal foreclosure. 

I have spent a fortune in legal fees and suffered extreme stress because SLS will not resolve this matter. I want a payoff statement, which I am by law entitled to, reflecting month to month calculation of the amounts SLS says I owe reflecting the forfeited payments XXXX refused, the interest rate adjustments that I was notified of by XXXX when the loan reset in XXXX and the cramdown deficiency being discharged and removed from the balance sheet as provided by the Bankruptcy Plan.

Since SLS has entered into a consent decree with the CFPB I am hopeful this matter can be resolved without me getting a Temporary Restraining Order and filing a lawsuit in either Bankruptcy court - seeking sanctions- or in California State Superior Court regarding mortgage fraud, breach of contract, violations of RESPA and the FCRA, etc. You at the CFPB have a consent decree. I ask that you use the leverage that provides to resolve this matter once and for all. 14 years of uncertainty about my property is entirely unacceptable. 

Thank you. XXXX XXXX

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