Reverse mortgage servicer denies CFPB Claims, agrees to settlement
Sutherland has been banned from engaging in reverse mortgage servicing activities for putting senior homeowners at risk of foreclosure – allegations the company denies.
The Consumer Financial Protection Bureau (CFPB) accused Sutherland and NOVAD Management Consulting of putting senior homeowners at risk of foreclosure due to ineffective communication and mishandling of reverse mortgages.
The Bureau said the companies “ignored complaints and calls for help, and they let problems snowball into disasters.”
Sutherland and NOVAD reportedly failed to provide homeowners with crucial information, such as loan payoff statements and foreclosure alternatives. Additionally, they were accused of falsely informing homeowners about default status, causing confusion and distress.
Read more: CFPB shuts down reverse mortgage servicers
Denying the allegations, Sutherland said it was not directly responsible for the reverse mortgage servicing conduct in question. The servicer added that it was hired to provide “specified, limited support services” under NOVAD’s contract with the Department of Housing and Urban Development (HUD). According to Sutherland, the contract ended in 2022.
Sutherland claimed it had no direct access to HUD guidelines, the servicing system, borrower communications, or files, as HUD controlled all aspects of reverse mortgage servicing and communicated only with NOVAD.
“Sutherland, therefore, disagrees with the CFPB findings and denies the CFPB’s allegations,” the company said in a statement emailed to MPA.
Despite denying the CFPB’s allegations, Sutherland agreed to a settlement of $11.5 million in redress to affected consumers and a civil penalty of approximately $5 million. The civil penalties will be deposited into the CFPB’s victims relief fund.
NOVAD is unable to pay based on review of NOVAD financial statements and its CEO’s tax returns. However, it must pay $1 to the fund, potentially making consumers eligible for additional relief in the future.
“Settling this issue allows Sutherland to close this matter on a subcontract that ended in 2022 so that it could focus on continuing to support its customers through industry-leading innovation and delivering high-quality digital solutions,” the company said.
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