Class Action Claims Select Portfolio Servicing Gave False Data to Credit Reporting Agencies, Made Foreclosure Threats

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A homeowner alleges in a proposed class action lawsuit that Select Portfolio Servicing knowingly gave credit reporting agencies inaccurate data about him and threatened him with foreclosure over outstanding mortgage payments accrued during the COVID-19 pandemic.

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The nine-page lawsuit was filed by a New York resident who claims the mortgage servicer refused to allow him to pay monthly installments and then misrepresented to credit reporting agencies that his mortgage payments were late. According to the suit, Select Portfolio Servicing instead demanded the man pay the full outstanding amount, which had accrued while his mortgage was placed into forbearance as a result of the pandemic.

The suit shares that at the conclusion of the plaintiff’s COVID-19 forbearance plan, the mortgage servicer informed him that he needed to pay the outstanding deferred balance upfront or face foreclosure. Per the case, Select Portfolio Servicing also began reporting the plaintiff as late on his credit report, even though the defendant was refusing to accept the man’s monthly payments.

As a result of the company’s “false threats,” the plaintiff feared his home would be foreclosed and paid the full lump sum, the complaint says.

The filing contends that Select Portfolio Servicing’s actions have contravened federal guidelines established to shield homeowners from the impact of COVID-19. As the lawsuit tells it, the Consumer Financial Protection Bureau (CFPB) issued regulatory guidance throughout the pandemic stipulating that once a homeowner’s forbearance period ended, the consumer would not have to pay the full amount upfront but would be allowed to pay installments over time.

“[Select Portfolio Servicing] paid no regard to the CFPB but was more interested in lining its pockets with full payments from consumers,” the suit asserts. “This is why [the company] sent its demand for full payment to [the plaintiff] and failed to provide any notice to [the man] that he would not be required to pay the deficiency off in one lump sum.”

In addition, the case alleges the defendant has violated the federal Fair Credit Reporting Act (FCRA) by disseminating “inaccurate and derogatory” information about the homeowner to credit reporting agencies.

“As a direct and proximate cause of [Select Portfolio Servicing’s] failure to perform its duties under the FCRA, [the plaintiff] has suffered injury to his credit worthiness and increased difficulty obtaining credit,” the complaint charges.

The Select Portfolio Servicing lawsuit looks to represent anyone in the United States who was subject to the same tactics wherein the defendant sought to recover the entire remaining debt balance in a lump sum payment after the consumer exited a forbearance arrangement.

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