bankruptcy

The Federal Trade Commission and the Consumer Financial Protection Bureau have announced a $63 million settlement in a dispute with the national mortgage servicing company, Green Tree Servicing. The FTC and CFPB charged Green Tree with thug-like collection methods including: barraging the debtor with phone calls as early as 5 a.m. and as late as 11 p.m.; threatening debtors with arrest, imprisonment, and garnishment; yelling at consumers and using obscene language; mocking illnesses and other personal situations causing financial distress; revealing debts to employers, neighbors, family; and taking payments out of debtors’ accounts without consent. It also failed to honor loan modifications, misapplied payments, provided incorrect creditor information to consumer reporting agencies, and overcharged or demanded unnecessary fees. $48 million of the settlement will go to affected consumers and $15 million represents civil penalties.

In addition to the $63 million dollars, the settlement requires Green Tree to clean up its act by implementing “a home preservation plan to offer options to consumers whose loans were transferred to the company during the time covered by the complaint.” It must cease collection on disputed debts until the completion of an investigation and verification of amounts owed. “The proposed order also prohibits Green Tree from making material misrepresentations about loans, processing procedures, payment methods, and fees, from taking unauthorized withdrawals from consumer accounts, and from violating the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act.” In short, the order requires Green Tree to competently and honorably perform the services a loan “servicer” is meant to perform.