In June 2024, the CFPB issued an order permanently banning New York-based Pittsford 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 agency described as illegal maintenance errors that harmed elderly homeowners and left some fearful of losing their homes. NOVAD held HUD’s Home Equity Conversion Mortgage (HECM) servicing contract for assigned loans from 2014 to 2022, and partnered with Sutherland to operate the servicing platform.
According to the CFPB, the companies have failed to hire enough staff to manage as many as 150,000 borrowers per year. This has reportedly led to widespread communication breakdowns, including delays or failure to respond to borrower requests for repayment statements, foreclosure alternatives, lien releases, and general information.
The CFPB said some borrowers were incorrectly told that their loans were in default or that foreclosure was imminent, even when no trigger event had occurred.
Under federal law, mortgage servicers are required to respond to consumers in a timely manner, a requirement that the CFPB says is especially important for reverse mortgage borrowers, who remain responsible for property taxes, insurance and other obligations.
The agency said the companies’ failures caused financial damage and emotional distress, especially among senior homeowners. As a result, the companies must repay $11.5 million to borrowers harmed by their servicing practices.
The CFPB has been hiring Rust advice to administer refund payments and respond to consumer inquiries regarding the case. Neither the CFPB nor NOVAD and Sutherland Global responded to requests for comment from HousingWire‘s Reverse Mortgage Daily.
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