WBK Industry News - State Regulatory Developments

NY AG Settles Deceptive Notice Claims with Reverse Mortgage Servicer

On March 1, 2021, an Assurance of Discontinuance (AOD) went into effect between the New York Attorney General and a national mortgage servicing company regarding allegations that the company’s reverse mortgage servicing division sent borrowers deceptive communications.  

Among the communications described in the AOD are pre-foreclosure notices that were sent to borrowers whose reverse mortgage was in default or had been accelerated and that allegedly contained language referring to a summons and complaint, suggesting to borrowers that a foreclosure action had been filed when it had not.  The AOD also refers to the servicer’s paying of property taxes without providing adequate notice to borrowers, resulting in duplicate payments of taxes.

The terms of the AOD prohibit the servicer from further violations involving New York borrowers and require the servicer to take certain steps to ensure compliance when sending tax payment and pre-foreclosure notices in the future.  In addition, the AOD requires the servicer to appoint an escalation contact whom not-for-profit housing counselors and other entities may contact regarding borrower defaults and loss mitigation options, and to pay $500,000 in monetary relief to the state’s Equitable Reverse Mortgage Assistance Program.