Shellpoint Mortgage Servicing faces a lawsuit in New Jersey over alleged Real Estate Settlement Procedures Act (RESPA) violations. A homeowner claims the servicing company delayed loss-mitigation reviews while simultaneously pursuing foreclosure activity and providing inconsistent financial figures.
The complaint centers on Shellpoint's failure to promptly evaluate the borrower for loan modification options, a requirement under RESPA regulations. The homeowner alleges the servicer sent conflicting statements regarding account balance, arrears amount, and required payments. This inconsistency prevented the borrower from understanding their actual financial obligation and evaluating modification eligibility.
Shellpoint continued foreclosure proceedings throughout this period, according to the suit. The company did not suspend collection efforts or halt the foreclosure process while reviewing loss-mitigation options, violating the servicer's obligation to pause adverse actions during the evaluation period.
RESPA requires mortgage servicers to acknowledge loss-mitigation inquiries within 15 days and provide a written decision within 30 to 120 days, depending on the loan program. Servicers must also maintain consistent communications and accurate account information throughout the evaluation process.
This lawsuit adds to ongoing compliance challenges in the mortgage servicing industry. Newrez, Shellpoint's parent company, operates one of the nation's largest servicing platforms. Loss-mitigation breaches carry significant penalties and class action exposure.
For homeowners, this case underscores the importance of documenting all communications with servicers and requesting loss-mitigation reviews in writing. Borrowers facing foreclosure should consider consulting legal counsel to enforce their RESPA rights. For servicers like Shellpoint, the lawsuit signals the need for tighter controls on loss-mitigation timelines and account statement accuracy. Regulators continue scrutinizing whether servicers prioritize profitable foreclosure activity over affordable modification programs that benefit both borrowers and investors