Green Tree Servicing LLC has agreed to pay more than $60 million to settle allegations that it abused distressed borrowers.
Green Tree is a mortgage servicing subsidiary of Walter Investment
Management Corp. with its headquarters in St. Paul, Minnesota.
A rapid expansion for the national residential servicer has built up its servicing portfolio to millions of loans.
It specializes in providing high-touch servicing on delinquent mortgages.
But Green Tree has been mistreating its borrowers on loans it acquired from other servicers, according to a joint announcement Tuesday from the Consumer Financial Protection Bureau and the Federal Trade Commission.
The company is accused of not honoring in-process loan modifications put in place by previous servicers. Instead, it demanded the pre-modification contract payments.
It also allegedly demanded payments before providing borrowers with loss mitigation options even though no such payments are needed, delayed short-sale decisions and harassed and threatened delinquent borrowers.
The government claims Green Tree representatives pushed borrowers into making pay-by-phone payments so it could earn a $12 fee instead
of offering other payment options.
Another allegation had Green Tree resorting to illegal collection practices like issuing false threats, making repeated calls and revealing debts to third parties such as employers.
“The CFPB and FTC allege that if a consumer was two weeks or more past due, Green Tree consumers could receive seven to 20 phone calls a day,” the announcement stated. “Some Green Tree representatives also told consumers that nonpayment of their mortgage loan could result in arrest or imprisonment. Or, representatives threatened seizure or garnishment of the consumer’s wages when Green Tree had no intention to take such actions. Such threats are illegal.”
Green Tree is additionally accused of failing to obtain information and documentation from previous servicers needed to accurately service the loans.
The CFPB said that Green Tree has agreed to pay $48 million to victims in restitution and a $15 million civil money penalty.
Green Tree also agreed to reform its servicing practices.
A complaint was filed in federal court by the two government agencies against Green Tree.
