Caliber Home Loans settled a grievance with the Massachusetts attorney general over allegations of providing distressed borrowers with unaffordable loan modifications.
The Coppell, Texas-based servicer agreed to a $2 million settlement and will provide restitution and loan modifications to homeowners in Massachusetts and change its business practices to comply with state law, a press release from the attorney general's office said.
"Mortgage servicing companies have a duty to help Massachusetts residents avoid foreclosure and stay in their homes," said Attorney General Maura Healey in a press release. "Our settlement with Caliber will provide relief to borrowers across the state and sends a clear message that we will protect homeowners when companies break the law."
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Under the terms of the settlement, Caliber will provide relief to Massachusetts borrowers who applied for modifications and were foreclosed upon. Caliber will also institute a new loan modification program and review borrowers living in the state currently on interest-only or short-term modifications to provide them with a "more sustainable, affordable" situation, the press release said.
"While Caliber disagrees with certain of the State of Massachusetts attorney general's characterizations, we are pleased to resolve this matter on agreeable terms. We are proud of our ability to have helped over 118,000 homeowners stay in their homes during the past 10 years," the lender said in a statement.
Caliber was allegedly offering modifications with temporarily lower payments that only covered the interest due each month. However, after a few years, the mortgage payment would supposedly balloon to an even higher amount that before, placing the borrower in jeopardy of foreclosure, the Massachusetts press release said.
"The AG's investigation found that Caliber favored these short-term, interest-only loan modifications over permanent, affordable modifications even in cases where a permanent modification was commercially reasonable," the release continued. Caliber was also alleged to have given borrowers the runaround over missing documents required for the modification review process.
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