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N.Y. Attorney General Recovers $350K From Mortgage Servicer

David Krechevsky
Mar 08, 2023
Mortgage Relief

Servis One, dba BSI Financial, failed to offer homeowners mortgage relief during the pandemic.

New York Attorney General Letitia James said Wednesday her office has recovered $350,000 for approximately 160 homeowners from a mortgage servicer that failed to offer mandated mortgage relief during the COVID-19 pandemic.

According to the Office of the Attorney General (OAG), the servicer — Servis One Inc., doing business as BSI Financial Services Inc. (BSI) — failed to offer the mandated mortgage relief to homeowners who could not make payments at the height of the pandemic. 

The OAG said an investigation found that BSI encouraged homeowners who faced financial hardships or who lost their jobs during the pandemic to continue making partial payments on their loans, and did not offer the mandatory relief. 

As a result of an agreement announced Wednesday, BSI will pay $350,000 in penalties and restitution to as many as 160 homeowners in Rochester, New York City, and Long Island who were not offered the relief.

“During the height of the pandemic, as we were grappling with fear, stress, and financial difficulties, these homeowners were denied the basic support they were supposed to receive,” James said. “BSI violated the law and left hundreds of families worrying about keeping a roof over their heads when they qualified for mortgage relief. Today’s agreement will put money back into homeowners’ pockets and continues our efforts to protect hard-working New Yorkers.”

Based on the amount being paid and the potential number of homeowners, the average payment would be $2,187.50 per homeowner.

At the start of the pandemic, federal and state authorities passed laws and regulations requiring the mortgage industry to provide temporary assistance to homeowners facing financial hardship. Mortgage loans backed or insured by federal authorities were subject to certain requirements that allowed homeowners facing a hardship to defer their mortgage payments for up to 12 months in 2020 and 2021. 

New York state provided similar assistance to homeowners with loans that were not federally backed, requiring mortgage servicers to offer similar relief to homeowners with privately owned mortgages.

The OAG found that BSI violated the law by failing to provide the mandatory mortgage relief. In one instance, a homeowner told BSI he had lost his business income due to the pandemic and struggled to make payments. An agent for the company told the homeowner to use his unemployment benefits or reduced income to make partial payments, even though the homeowner was entitled to mortgage relief. 

In other instances, the OAG said, BSI allowed payments to be deferred only on a month-to-month basis, and in at least one instance told a homeowner that additional relief would be contingent on their willingness to make partial or future payments. 

In each of these instances, BSI failed to inform homeowners of their rights to defer their mortgage payments for up to 12 months, the OAG said.

The agreement states that BSI "does not contest the OAG's assertion that in some instances its actions violated the statutory provisions," and that the company has agreed to the settlement "to avoid the time, expense, and distraction of litigation."

The agreement requires BSI to provide restitution to certain current and former customers with privately owned mortgages whose loans were subject to relief requirements. Under the agreement, BSI is required to:

  • Offer forbearance relief to homeowners whose mortgage loans are currently serviced by BSI and who suffered a financial hardship but were initially denied mortgage relief, and
  • Provide restitution of up to two monthly mortgage payments to homeowners whose loans were previously serviced by BSI and who suffered a financial hardship, but who were not offered mortgage relief.

Eligible homeowners will be contacted about the agreement and provided instructions for claiming restitution, the OAG said.

James also asked any homeowner who believes their mortgage servicer is not offering proper loss-mitigation options in the event of an economic hardship to file a complaint online with OAG's Consumer Frauds and Protection Bureau, or to call the office at 1-800-771-7755.

Published
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