The


Consumer
Financial
Protection
Bureau
(CFPB)
on
Tuesday
announced
a
series
of
enforcement
actions
against
two
companies
for
what
the
bureau
called
“illegal
activities
that
harmed
older
homeowners
and
caused
them
to
fear
losing
their
homes.”

The
actions
were
taken
against
Pittsford,
New
York-based

Sutherland
Global
and
Landover,
Maryland-based


NOVAD
Management
Consulting,
which
together
formed
a
Home
Equity
Conversion
Mortgage
(HECM)
servicing
operation
on
behalf
of
the


U.S.
Department
of
Housing
and
Urban
Development
(HUD).

NOVAD,
which
held
the
HUD
HECM
servicing
contract
for
assigned
loans

from
2014
to
2022,
worked
with
Sutherland
to
form
the
HECM
loan
servicing
operation
on
behalf
of
HUD.
But
the
bureau
alleges
that
the
companies
did
not
maintain
adequate
staffing
to
handle
as
many
as
150,000
borrowers
per
year,
which
the
government
claims
led
to
neglect
for
(and
fear
from)
the
senior
borrowers
they
were
contracted
to
serve.

“This
caused
systematic
failures
to
respond
to
thousands
of
homeowner
requests
for
assistance,
and
caused
financial
harm
to
borrowers,
including
losing
out
on
home
sales
and
paying
unnecessary
costs,”
the
bureau
explained.

Under
federal
law,
mortgage
servicers
are
required
to
respond
to
consumers
in
a
timely
manner,
a
requirement
that
has
added
importance
for
reverse
mortgage
borrowers,
the
bureau
stated.

“That
requirement
is
important
to
protect
reverse
mortgage
borrowers,
who
remain
responsible
for
property
taxes,
insurance,
and
other
applicable
fees
and
assessments,”
the
CFPB
stated.
“However,
many
borrowers
could
not
get
in
contact
with
anyone
at
the
loan
servicing
operation.
In
fact,
the
companies
systematically
failed
to
respond
to
thousands
of
homeowner
requests
for
loan
payoff
statements,
short
sales,
deeds-in-lieu
of
foreclosures,
lien
releases,
and
requests
for
general
information.”

Due
to
the
lack
of
response,
the
companies
“allowed
problems
to
fester
to
critical
points,”
including
many
borrowers
who
feared
displacement
through
a
foreclosure.
The
companies
“hang[ed]
homeowners
out
to
dry”
by
preventing
HECM
borrowers
from
fulfilling
their
annual
occupancy
requirement,
obtaining
loan
payoff
statements
and
finding
foreclosure
alternatives,
the
bureau
said.

Communication
failures
also
caused
homeowners
to
be
falsely
told
they
were
in
foreclosure
when
that
was
not
the
case,
the
CFPB
added.

“The
companies
sent
false
repayment
letters
to
older
adult
homeowners
stating
that
their
reverse
mortgage
loans
were
due
and
must
be
paid
within
30
days
due
to
a
default
condition,
when
no
such
trigger
event
had
occurred,”
the
CFPB
explained.
“The
companies
would
then
improperly
ignore
attempts
by
reverse
mortgage
borrowers
to
address
and
correct
the
‘due
and
payable’
letters.”

The
enforcement
order
bans
Sutherland
Global
—
and
its
subsidiaries

Sutherland
Government
Solutions
and

Sutherland
Mortgage
Services
—
as
well
as
NOVAD
from
“engaging
in
reverse
mortgage
activities,
imposes
strict
compliance
requirements
on
future
reverse
mortgage
activities
of
Sutherland
Mortgage
Services,
requires
the
Sutherland
companies
to
pay
$11.5
million
in
redress
to
affected
consumers,
and
requires
all
companies
to
pay
a
civil
penalty
of
approximately
$5
million,
which
will
be
deposited
in
the
CFPB’s
victims
relief
fund.”

NOVAD’s
fine,
however,
is
limited
to
$1.

“Due
to
NOVAD’s
declaration
of
an
inability
to
pay,
the
order
requires
NOVAD
to
pay
$1
to
the
CFPB’s
victims
relief
fund,”
the

announcement
stated.
“By
requiring
NOVAD
to
pay
at
least
$1
in
penalties,
the
CFPB
can
make
consumers
eligible
for
additional
relief
from
the
CFPB’s
victims
relief
fund
in
the
future.”

CFPB
Director

Rohit
Chopra
characterized
the
actions
leading
to
the
enforcement
orders
as
stemming
from
a
neglectful
attitude.

“Sutherland
and
NOVAD
were
unprepared
to
support
the
hundreds
of
thousands
of
older
homeowners
whose
reverse
mortgages
the
defendants
were
responsible
for,”
Chopra
said
in
a
statement.
“The
defendants
ignored
complaints
and
calls
for
help,
and
they
let
problems
snowball
into
disasters.
Older
homeowners
did
not
choose
Sutherland
and
NOVAD
as
their
reverse
mortgage
servicer,
and
the
CFPB
is
holding
these
defendants
accountable
for
their
unlawful
neglect.”

Celink
was
awarded
the
HECM
servicing
contract
in
2022.
NOVAD

filed
a
protest
in
June
of
that
year,
but
Celink
assumed
the
contract
in
December.

Representatives
for
Sutherland
could
not
be
immediately
reached
for
comment.
A
person
who
answered
the
phone
number
listed
for
NOVAD
said
the
company
had
no
comment.

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