A national mortgage servicing company headquartered in Fort Worth, Texas, has agreed to pay borrowers $1.5 million in restitution for allegedly thwarting their attempts to save their homes from foreclosure, a federal watchdog agency announced Thursday.
The Consumer Financial Protection Bureau says Residential Credit Solutions Inc. broke the law since 2009 by not honoring loan modifications agreed to by previous servicers and demanding that borrowers waive their rights in future foreclosures and bankruptcies if they wanted to qualify for repayment plans.
The company also gave false information to some borrowers, misleading them about everything from unpaid balances and interest rates to payment due dates and how much money they owed each month, the bureau said in court documents.
Residential Credit Solutions was founded by Dennis Stowe, who previously worked in the subprime lending industry.
75,000 Number of borrowers who had their loans transferred to Residential Credit Solutions since 2009
“By failing to honor loan modifications already in place, Residential Credit Solutions put consumers through more headaches but in some cases cost consumers their homes,” said the bureau’s director, Richard Cordray, in a statement.
Residential Credit Solutions also will pay a $100,000 civil penalty and must help borrowers save their homes as part of the agreement announced by the consumer bureau on Thursday.
The company agreed to the payment without admitting or denying any of the charges.
A woman who answered the phone at Residential Credit Solutions on Thursday declined to comment. The company has been the subject of complaints before, with borrowers across the country complaining on websites and with government agencies about the firm’s practices.
Residential Credit Solutions, which holds about $95 million in total assets, specializes in overdue loans and loans to borrowers who are at high risk for default, according to the consumer bureau.
The company collects payments and processes “loss mitigation” programs such as short sales and repayment plans intended to help borrowers avoid foreclosure.