Consumer complaint received 2020-09-14 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Struggling to pay mortgage — 
Company: Shellpoint Partners, LLC
State: CA

Complaint narrative:
This complaint concerns servicers XXXX XXXX XXXX, XXXX XXXX XXXX, and Shellpoint Mortgage Servicing who are responsible for scheduling a foreclosure sale of my property in XXXX California on XX/XX/XXXX, although they have no contractual basis for exercising the power of sale and are acting in conscious and willful disregard of my rights without regard to their legal obligations. 

The servicer is obligated not to foreclose absent certain conditions precedent as stated in Section 22 of the DOT and that obligation was breached by noticing a foreclosure sale although the conditions precedent were absent. I have not defaulted on my legal obligations instead they violated the loan contract by overcharging, preventing and refusing performance, and inducing nonpayment in an effort to benefit by taking my home. 

Their actions constitute unfair, deceptive, and abusive acts or practices in violation of the FDCPA. They are misrepresenting the amount and legal status of the debt in violation of 15 U.S.C. 1692e ( A ). The scheduled sale is a threat to take action that can not legally be taken in violation of 15 U.S.C. V1692e ( B ) 5.

It is an unconscionable and unfair means to collect a debt prohibited by 15 U.S.C. 1692f and the amount they are claiming due is not  expressly authorized by the DOT which does not allow the imposition of foreclosure fees and charges in the absence of the borrower 's default. 

In XXXX, while in violation of the loan contract per the FTC action against XXXX, XXXX induced a default in payments with false promises of improved loan terms. Upon following their instructions to skip three months I called to catch up but my payments were refused. I was told they were not necessary, it was a benefit to borrowers while new terms were being determined. A few weeks later foreclosure was initiated and in my concern, I spoke with numerous agents, all of whom assured me it was a technicality and to be patient during the lengthy process. I relied on this misrepresentation to my detriment. For two years XXXX concealed that they lacked authority from the investors to modify and then denied a modification. 

I'd fallen victim to a profit-driven scheme in which servicers strategically induce default and initiate foreclosure. This allows them to unlawfully impose foreclosure charges and earn special servicing fees while high-interest rate arrears accrue. Having actively prevented the borrower from making payments and placing them in default the borrower is similarly prevented from achieving affordable rates through refinancing and is locked into a high-interest rate. The payments accrue as do the unlawful charges earning interest at the note rate and the principal balance balloons. This scheme increases the likelihood of foreclosure or can make modification more profitable by capitalizing high-interest rate arrears and charges into the new principal balance earning interest on interest. 

Under statute, if non-payment is induced or payment is prevented or refused by the creditor then performance is excused and the borrower is entitled to the benefits of performance. See Cal. Civil Code 1504, 1511-12.

The conduct also constitutes a material failure to perform on the part of the servicer in their capacity as agent for the Lender. It is well-settled law that if one party prevents or makes impossible the  performance of a condition then that condition is excused. It has the legal effect of suspending the borrower 's performance until their material failure to perform is cured. Restatement ( Second ) of Contacts 237.

The servicers ' interference both prevented me from making payments and prevented me from finding affordable terms by refinancing. At the prevailing rate at the time my mortgage payments to date would have been {$220000.00}. Instead with high-interest rate arrears and foreclosure charges they claim I owe {$400000.00}. 

Keeping a debt collector from wrongfully foreclosing requires diverting an extraordinary amount of time and money that could otherwise have paid down the loan balance. A very modest estimate of the loss of income and legal expenses to date is {$250000.00}. 

The matter has been before the Court who ruled that a foreclosure sale would be wrongful due to the misconduct XXXX  XXXX XXXX failed to cure. While aware of the legal consequences they failed to exercise cure rights and are relying on the disparity of resources and power to wrongfully foreclose Servicers XXXX and Shellpoint have in succession continued to undermine my efforts to meet loan obligations by trying to foreclose without the legal right to enforce the contract. Rather than curing the material failure to perform and allowing me to resume making payments, they are leveraging their position of power in an effort to either extort money far in excess of the amount owed to take my home. 

Instead of negotiating fairly with me to resolve the debt the servicers repeatedly schedule sales as an exercise in intimidation much like a mock execution. The purpose is to taunt me with their disregard for the law and the ease with which they could cause me irreparable harm. A sale is scheduled, something they may not legally do, and they threaten to sell my home of thirty years unless I pay them money to which they're not entitled. Much like its counterpart, this is intended to frighten and wear down resistance by waiting to cancel the sale increasingly close to the last minute. In the past year, they have scheduled at least five sales, in the previous years over ten sales have been scheduled. This results in my privacy being invaded by people driving by asking questions and my name in the newspaper prompts calls and texts from strangers inquiring about the house.

The natural consequence of this conduct is to harass, oppress, or abuse in connection with the collection of a debt and is a violation of 15 U.S.C. 1692d.These tactics are all the more egregious as they are not being employed just to collect a debt but they are threatening to take my home as a means to extort money far in excess of the debt owed. Just as those repeatedly subject to mock executions are often scarred for life, this unlawful and abusive practice has had a profound effect on my emotional well being and my physical health including a XXXX XXXX XXXX  that now limits my mobility. 

It is outrageous for federally regulated institutions to engage in unfair, deceptive, and abusive practices and injure borrowers in an effort to unlawfully take their homes. Nonetheless, inducing default and interfering with a borrower 's performance may afford a profit potential if a property is desirably located with substantial equity. The difference between a credit bid and resale value can represent a windfall. It's unrealistic to expect servicers to monitor themselves with this sort of incentive. Because it results in unavoidable injury to the consumer as a violation of the FTC Act I urge the CFPB and the FTC to investigate. 

XXXX XXXX

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