Specialized Loan Servicing (SLS) Improperly Processing Loan Modifications

On October 7, 2016, Tycko & Zavareei LLP filed a class-action lawsuit against Specialized Loan Servicing (SLS) in California for improperly processing loan modification applications.

Following the Great Recession of 2007 and 2008, unemployment skyrocketed and homeowners saw the value of their homes plummet.  This led many homeowners to apply for mortgage modifications to make their loans more manageable to avoid going into foreclosure.  In fact, the federal government even created certain programs, such a Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) to incentivize banks and mortgage servicers to offer loan modifications.  But most homeowners’ modification requests went unanswered, or were processed improperly, resulting in thousands of homeowners defaulting on their loans and going into foreclosure.

To stem the tide of defaults and foreclosures, the U.S. Consumer Financial Protection Bureau (CFPB) implemented a series of guidelines designed to force banks and mortgage servicers to process loan modification requests quickly, accurately, and transparently.  The guidelines went into effect in January 2014 and they provided homeowners a private right of action.  In other words, homeowners whose rights under these guidelines were violated have a right to seek redress by filing a civil lawsuit.

The lawsuit alleges that SLS refused to abide by the CFPB’s new guidelines and failed to bring its system for processing loan modification applications into compliance.  Specifically, the lawsuit alleges that SLS, among other things:

  1. Failed to timely respond to loan modification applications;
  2. Failed to inform borrowers what information was missing in order to process their loan modification application;
  3. Falsely told borrowers their application was missing information that had already been provided on numerous occasions;
  4. Denied borrowers’ loan modification requests without an appropriate explanation; and
  5. Wrongfully threated foreclosure while a borrower’s application was still under review.

We are interested in hearing from consumers nationwide.  If you have applied for a home loan modification with SLS since January 2014 and were denied a modification, or believe your application was processed improperly, please contact us by filing in your information below.

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