BOSTON – A national mortgage servicing company will provide $4 million in relief for Massachusetts residents to settle allegations that it failed to help homeowners avoid foreclosure, Attorney General Maura Healey announced today.
In the assurance of discontinuance, filed in Suffolk Superior Court, New Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing (Shellpoint) will provide millions in relief to borrowers in the form of reductions on the principal balances of their loans and waive shortfalls when borrowers sell their homes for less than what they owe. Shellpoint will also change their practices to better assist struggling homeowners going forward.
“This settlement will put money back into the pockets of homeowners who were harmed and will ensure Shellpoint amends its practices and complies with the law,” said AG Healey. “We are committed to making sure Massachusetts residents are able to stay in their homes, particularly when their mortgages and loans have been mishandled by companies like this one.”
“Many thanks to Attorney General Maura Healey and her office for negotiating this settlement agreement,” said Marty Jones, interim CEO of Urban Edge, a community development corporation based in Roxbury and Jamaica Plain. “The changes that this settlement will bring will help vulnerable families in our neighborhood seeking to stay in their homes. We appreciate the working partnership we've had with Attorney General Healey's office in foreclosure prevention and we look forward to continuing that work.”
The AG’s Office alleges that the company violated the Massachusetts Act Preventing Unlawful and Unnecessary Foreclosures – known as “35B” – a landmark law passed in 2012 that protects certain borrowers from foreclosure. The law requires creditors to make a good faith effort to avoid foreclosure for borrowers whose mortgage loans have unfair subprime terms. The AG’s Office also alleges that Shellpoint violated the Massachusetts Consumer Protection Act.
Under the terms of the settlement, Shellpoint is required to provide a total of $3.5 million in principal reduction through a loan modification program and waiving shortfalls when borrowers sell their homes for less than they owe. Shellpoint will also make a $450,000 payment to the Commonwealth.
The AG’s Office began an investigation into Shellpoint after receiving complaints from Massachusetts consumers indicating they experienced significant problems getting through to Shellpoint representatives and applying for loan modifications such that they were at an unfair risk of foreclosure.
The investigation revealed that Shellpoint failed to ensure a single point of contact for borrowers; that it mishandled calls from borrowers with limited English language capacity; that it created unnecessary difficulties for homeowners after a divorce or the death of a co-borrower; and that it mishandled mortgage loans transferred from other servicing companies. The AG’s Office also found that Shellpoint did not provide a timely and efficient loan modification review for eligible borrowers, as required by Section 35B. Shellpoint agreed to make major business practice changes to address these deficiencies and was responsive to the AG’s Office during the course of the investigation.
This case is part of the AG’s Office’s investigation of the mortgage servicing industry and its compliance with the Massachusetts Act to Prevent Unnecessary Foreclosures. AG Healey is committed to ensuring that all mortgage servicers respect the rights of homeowners under this important state law.
The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan Stanley, Goldman Sachs, Royal Bank of Scotland, Citigroup, JPMorgan Chase, Countrywide, Fremont Investment & Loan, Option One, Ditech, HSBC, PHH, Nationstar and others on behalf of Massachusetts homeowners.
Consumers with questions or concerns about deceptive or abusive foreclosure and loan servicing practices can call the Attorney General’s consumer hotline at 617-727-8400 or file a complaint with the office.
This matter was handled by Assistant Attorneys General Mercy Cover and Lisa Dyen and Division Chief Max Weinstein, all of the AG Healey’s Consumer Protection Division, with assistance from Consumer Specialist Patricia DeRoche of the AG’s Consumer Advocacy and Resources Division.