Reverse mortgage borrowers could get checks after CFPB action

"In June 2024, the CFPB issued an order that permanently bars Pittsford, New York-based Sutherland Global Services and its subsidiaries, Sutherland Government Solutions, Sutherland Mortgage Services and NOVAD, from servicing reverse mortgages. The enforcement action stemmed from what the bureau described as illegal servicing failures that harmed older homeowners and caused some to fear losing their homes. NOVAD held HUD's Home Equity Conversion Mortgage (HECM) servicing contract for assigned loans from 2014 to 2022, and it worked with Sutherland to operate the servicing platform."

"The CFPB said the companies failed to maintain a proper amount of staffing to manage as many as 150,000 borrowers per year. This reportedly led to widespread communication breakdowns, including delays or non-responses to borrower requests for loan payoff statements, foreclosure alternatives, lien releases and general information. The CFPB said some borrowers were incorrectly told their loans were in default or that foreclosure was imminent, even when no triggering event had occurred."

"The bureau said the companies' failures caused financial harm and emotional distress, particularly among senior homeowners. As a result, the companies are required to pay $11.5 million in restitution to borrowers harmed by their servicing practices. The CFPB has hired Rust Consulting to administer the restitution payments and respond to consumer inquiries related to the case."

The CFPB permanently barred Sutherland Global Services, its subsidiaries and NOVAD from servicing reverse mortgages due to illegal servicing failures that harmed older homeowners. NOVAD held HUD's HECM servicing contract for assigned loans from 2014 to 2022 and worked with Sutherland to operate the servicing platform. The companies failed to maintain adequate staffing to manage as many as 150,000 borrowers, causing widespread communication breakdowns, delays or non-responses to payoff statements, foreclosure alternatives, lien releases and general information. Some borrowers were incorrectly told loans were in default or that foreclosure was imminent. The companies must pay $11.5 million in restitution administered by Rust Consulting.

Read at www.housingwire.com