The Department of Banking News Bulletin
Bulletin # 2904 - Week Ending October 18, 2019
This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to Jorge L. Perez, Banking Commissioner, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800. Written comments will be considered only if they are received within ten business days from the date of this bulletin.
Settlement Agreement and Consent Order
On October 9, 2019, the Commissioner, along with mortgage regulators of Florida, Georgia, Massachusetts, Rhode Island, Washington, and West Virginia, entered into a Settlement Agreement and Consent Order with Seterus, Inc. (NMLS # 787641), Research Triangle Park, North Carolina. The Settlement Agreement and Consent Order was based on a multi-state examination. The examination conducted by seven states revealed that from April 2014 to June 2016, Seterus committed certain violations of State and Federal laws and regulations, including failing to timely respond to qualified written requests in violation of Section 1024.36(d)(2) of the Real Estate Settlement Procedures Act, 12 CFR Part 1024 (“RESPA”), failing to exercise reasonable diligence in obtaining documents and information to complete loss mitigation applications in violation of Section 1024.41(b)(1) of RESPA, failing to timely acknowledge receipt of borrower loss mitigation applications in violation of Section 1024.41(b)(2)(i)(B) of RESPA, failing to include in notices a reasonable date by which borrowers should submit documents and information necessary to make loss mitigation applications complete in violation of Section 1024.41(b)(2)(ii) of RESPA, failing to obtain audits pursuant to the Uniform Single Audit program for Mortgage Bankers as approved by the Mortgage Bankers Association of America, failing to file accurate reports, failing to provide access to books and records, failing to update a change to a Nationwide Multistate Licensing System and Registry (“NMLS”) disclosure question within ten (10) days of such change, collecting a late fee that exceeded the contractual maximum amount allowed and failing to implement a compliance management system and formal audit program to effectively manage the compliance and business risk of its consumer collections operations. Seterus further disclosed that it improperly collected late fees in excess of Six Million Dollars ($6,000,000) from over fifty thousand (50,000) borrowers, from a period of time commencing in 2013, up to and including 2016, and identified issues with its loss mitigation application acknowledgment process and responsive letter sent in error (hereinafter the “L266 letter”), or with inaccuracies or other deficiencies in their L266 letters to consumers. The Settlement Agreement and Consent Order, among other things, requires Seterus, Inc. to: pay the sum of $350,000 as a civil penalty, to be divided equally among the seven state mortgage regulators; and to submit a report within sixty (60) calendar days containing an accounting of restitution of late fees to borrowers as well as an affidavit confirming that all impacted borrowers have been remediated.