On June 18, 2024, the CFPB ordered a reverse mortgage servicing operation to stop illegal activities that harmed older homeowners and caused them to fear losing their homes. The CFPB found that the customer service operation of Sutherland Global, its subsidiaries Sutherland Government Solutions and Sutherland Mortgage Services, and NOVAD Management Consulting had inadequate resources and staffing to handle as many as 150,000 borrowers.
Sutherland and NOVAD partnered to manage reverse mortgages for HUD. These loans are for homeowners 62 and older who want income from their home's value. Sutherland’s operational inadequacies 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. According to CFPB Director, Rohit Chopra, the defendants ignored complaints and calls for help, and they let problems snowball into disasters.
The CFPB found that Sutherland and NOVAD violated both the Consumer Financial Protection Act and the Real Estate Settlement Procedures Act. Specifically, the companies harmed older adults with a reverse mortgage by:
Failing to communicate stopped homeowners from being able to prove occupancy, obtain loan payoff statements, and complete alternatives to foreclosure; and
Falsely telling homeowners they were in default by sending 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 companies would then improperly ignore attempts by reverse mortgage borrowers to address and correct the “due and payable” letters.
The CFPB issued separate orders against Sutherland and NOVAD.
The CFPB’s order against Sutherland requires the company to:
Cease reverse mortgage servicing activity;
Provide over $11 million in consumer redress; and
Pay $5 million in civil penalty.
The CFPB order against NOVAD requires the company to:
Permanently cease all reverse mortgage servicing activity; and
Pay a civil penalty.
Read the CFPB’s news release here.
The consent order against Sutherland Global can be found here.
The consent order against NOVAD can be found here.