Green Tree Servicing to pay $63 million to settle illegal loan servicing charges

Green Tree Servicing of St. Paul has agreed to pay $48 million to an unspecified number of mortgage customers and a civil penalty of $15 million to the Federal Trade Commission and the Consumer Financial Protection Bureau to settle charges that it used illegal loan servicing and debt collection practices.

Green Tree, owned by Walter Investment Management Corp. of Florida since 2011, made abusive collection calls to consumers, misrepresented balances owed, charged bogus fees, and failed to honor previous loan modification agreements, according to the FTC.

"It's against the law for a loan servicer to lie about the debts people owe, or threaten and harass people about their debts," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a prepared statement. "The FTC and CFPB are holding Green Tree responsible for mistreating homeowners, including people in financial distress."

"We believe this resolution is in the best interest of Green Tree, our consumers, our clients and our shareholders," CEO Mark J. O'Brien of Walter Investment, said in a prepared statement. "We … continue to be committed to properly serving homeowners and helping them remain in their homes."

Green Tree became the servicer for thousands of consumers who were behind on their mortgage payments when their loans were transferred to Green Tree, according to an investigation started in 2010. According to the FTC and the CFPB, Green Tree collectors:

• Called consumers who were late on mortgage payments repeatedly and daily, from 5 a.m. to 11 p.m., or at their workplace, often multiple times every day for weeks.

• Threatened consumers with arrest or imprisonment, seizure of property, garnishment of wages, and foreclosure, and "used loud and abusive language, including calling consumers deadbeats, mocking their illnesses and other struggles, and … cursing."

The government also said Green Tree failed to honor loan modifications that were in the process of being finalized when consumers' loans were transferred from lenders or other servicers to Green Tree. This resulted in consumers making higher monthly payments, and even losing their homes to foreclosure. Green Tree also allegedly misled consumers about their loss-mitigation options and improperly charged upfront payments for loan-modification consideration.

Green Tree has agreed to establish a comprehensive data-integrity program to ensure account accuracy, honor previous mortgage modifications and add personnel and technical capacity, and make its loss mitigation application available to consumers at no cost.

In the Walter Investment statement, O'Brien said, "We continue to develop and deploy best practices in our servicing operations and believe these standards will serve us well as we partner with our consumers to support them in their goal to achieve sustainable homeownership."

Customers who believe they have a claim can call the Federal Trade Commission at 1-877-382-4357 or file a claim online at www.FTC.gov.