Mass. company agrees to benefits for owners of unfair loans
Martha Coakley (D)
BOSTON (Legal Newsline) - A Massachusetts mortgage servicing company that purchased approximately 280 unfair loans serviced by another company has agreed to provide the borrowers with significant benefits.
Carrington Mortgage Servicing, LLC, entered into an agreement with Attorney General Martha Coakley's office over the unfair loans, which originated and were previously serviced by Fremont Investment & Loan.
Carrington purchased certain mortgage servicing rights from Fremont in April 2008, which made Carrington subject to obligations under a letter agreement with the Coakley's office. The obligations were similar to those already issued in a Suffolk Superior Court injunction against Fremont in February 2008.
The Superior Court's injunction highlighted Fremont's unfair and deceptive conduct, prohibiting the company from initiating or advancing foreclosures on loans that are presumptively unfair.
That injunction, modified in March 2008, was upheld by the Supreme Judicial Court in December and made permanent in June.
The expanded March 2008 injunction prohibited Fremont from assigning or selling Massachusetts loans owned by the company or servicing obligations on those loans unless a buyer, in writing, agreed to be bound by the obligations set forth in the original injunction.
In the agreement between Carrington and the attorney general's office, Carrington agreed to memorialize Carrington's obligations, which include how the Fremont loans would be modified in order to avoid unnecessary foreclosures and to account for the unfair and deceptive lending practices of the California-based Fremont.
Fremont loan holders that are now serviced by Carrington, under terms of the agreement, will now receive benefits that include loan modifications for borrowers who are found eligible pursuant to President Obama's Home Affordable Modification Program.
The loans will be modified through a variety of steps to ensure affordable monthly mortgage payments for borrowers and to reduce interest rates, extend amortization periods and principal forbearances.
Eligible borrowers who make timely payments on their HAMP modifications will receive opportunities for principal reductions to obtain refinancing.
Delinquent borrowers will see alternatives to foreclosures thanks to the agreement, such as short sales, deeds-in-lieu of foreclosures or relocation payments.
The attorney general's office will also be given opportunities to object to foreclosures and denials of loan modifications. Carrington must also receive court approval to foreclose on a loan if Carrington and the attorney general's office cannot resolve an objection