A California mortgage servicer is paying $4.6 million to settle allegations it violated mortgage servicing and debt collection laws during the pandemic.
The settlement between Select Portfolio Servicing, a large sub-prime mortgage servicer, and California Attorney General Rob Bonta, includes enforcement of California’s Homeowner Bill of Rights, a set of laws that provide protections to homeowners who are facing foreclosure.
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The settlement is subject to court approval. The deal means SPS must pay $1.6 million in civil penalties and $3 million in consumer relief, and must make changes to ensure homeowners receive support and accurate information when seeking loan modifications and other foreclosure-prevention alternatives.
Findings from the California Department of Justice’s investigation into SPS include that the company failed to give homeowners adequate information about COVID-19 forbearance plans, sent mortgage statements to borrowers on COVID-19 forbearance plans wrongly stating that late fees would be charged for missed payments and failed to ensure that homeowners seeking foreclosure prevention alternatives received adequate support from the single points of contact SPS was required to provide under HBOR.
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