Ditech Financial (Previously Green Tree Servicing) hit with seven-figure fine

by Michael Mata30 Sep 2016
Maura Healey, the Attorney General of Massachusetts, is calling for tighter state regulations over the debt collection industry following a series of debt collection lawsuits and settlements—the most recent one announced on yesterday.

Healey’s office announced that a Florida mortgage company—Ditech Financial LLC—had agreed to pay the state $1.4 million to settle allegations it had violated Massachusetts debt collection laws. Ditech is alleged to have tried to collect on more than 5,000 delinquent mortgage accounts in Massachusetts since 2012 using unlawful tactics like calling borrowers as many as 12 times a day.

Healey described Ditech’s practices as “abusive,” as the company’s repeated calls to borrowers exceeded the two calls a week permitted by the state. Homeowners have also gone into foreclosure without receiving appropriate and timely information about their debts. 

“Debt collection is a serious issue for people; it has ramification[s] on their lives,” said Healey. “As more and more people [are] facing debt due to failed mortgages, student debt, credit-card debt, it’s important that our regulations are followed.”

Ditech Financial was formerly known as Green Tree Servicing LLC, and the latter has had its own share of regulatory problems and lawsuits.

In April last year, Green Tree paid $63 million in fines and restitution after the Consumer Financial Protection Bureau and the Federal Trade Commission stated that the company had committed a number of violations, including failing to honor prior loan modifications, demanding payments before notifying borrowers of their options, and making false threats and repeated phone calls to borrowers who’d fallen behind.

As a result of such violations, federal and state regulators are considering changes that would restrict some of the most abusive practices of the debt collection industry.

Proposed state rules that will likely come up in next year’s legislative session include prohibiting debt collectors from seeking civil arrest warrants, capping the collections of debt more than three years old, and placing further limits on the garnishment of wages.

The Consumer Financial Protection Bureau has also ventured proposals that would require companies to limit phone calls to debtors, disclose the details of the debts, and make it easier for consumers to dispute the money owed.

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