The Consumer Financial Protection Bureau (CFPB) ordered three reverse mortgage servicing companies to cease operating in their industry, citing what the regulator described as “illegal activities that harmed older homeowners and caused them to fear losing their homes.”
The CFPB faulted the customer service operations at NOVAD Management Consulting and Sutherland Global, along with the latter’s subsidiaries Sutherland Government Solutions and Sutherland Mortgage Services. The regulator claimed the companies’ communications problems stopped homeowners from being able to prove occupancy, obtain loan payoff statements, and complete alternatives to foreclosure. The companies were also accused of sending false repayment letters to older adult homeowners while ignoring attempts by reverse mortgage borrowers to address and correct the “due and payable” letters. As many as 150,000 reverse mortgage borrowers were impacted by the companies, the regulator added.
The CFPB issued permanent bans against Sutherland Global, Sutherland Government Solutions and NOVAD from engaging in reverse mortgage activities while imposing strict compliance requirements on future reverse mortgage activities of Sutherland Mortgage Services. Furthermore, the Sutherland companies were ordered to pay $11.5 million in redress to affected consumers and all of the companies were ordered to pay a civil penalty of approximately $5 million, which will be deposited in the CFPB’s victims relief fund.
The CFPB also acknowledged NOVAD’s declaration of an inability to pay the order by requiring NOVAD to pay $1 to the CFPB’s victims relief fund, thus enabling its consumers to be eligible for additional relief from the CFPB’s victims relief fund in the future.
“Sutherland and NOVAD were unprepared to support the hundreds of thousands of older homeowners whose reverse mortgages the defendants were responsible for,” said CFPB Director Rohit Chopra. “The defendants ignored complaints and calls for help, and they let problems snowball into disasters. Older homeowners did not choose Sutherland and NOVAD as their reverse mortgage servicer, and the CFPB is holding these defendants accountable for their unlawful neglect.”
;
