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Friday, October 24, 2014

Mortgage Servicer Under Fire for Backdated Letters

By ABIA Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC

New York’s top financial regulator, Benjamin Lawsky, is investigating a mortgage servicer for backdating thousands of letters to borrowers.

The Wall Street Journal reports: “In a toughly worded letter sent to [a mortgage servicer] on Tuesday, . . . [Mr.] Lawsky said that even after an employee at the firm discovered and reported instances of backdating, [the mortgage servicer] ignored them for months and still hasn’t corrected them, nearly a year after they were initially found. . . . ‘[The mortgage servicer's] indifference to such a serious matter demonstrates a troubling corporate culture that disregards the needs of struggling borrowers,’ Mr. Lawsky wrote.

“The . . . letters had been sent to borrowers who were behind on payments or in need of loan modifications providing easier terms, Mr. Lawsky said. Many went to borrowers who had been denied loan modifications, informing them they had 30 days to appeal the decision. But the deadline had passed by the time the backdated letters arrived.”

“[A] person close to the matter said the regulator was likely to demand a settlement or consent order that would require that [the mortgage servicer] find borrowers who had received backdated letters and give them an extended opportunity to correct loan delinquencies or other problems.”