Consumers Claim Seterus Misrepresented Foreclosure Policy in ‘Threatening’ Letter

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A proposed class action lawsuit alleges that Seterus, Inc. issued unlawful letters containing “false threats and misleading representations regarding the amounts that consumers must pay, and when they must pay it, in order to continue to own their homes.”

The suit was filed by two New York consumers whose delinquent mortgage was acquired by Seterus in March 2015, the complaint says. The plaintiffs claim they received a threatening letter from the defendant regarding their mortgage loan that stated, in part (emphasis in complaint):

“If you send only a partial payment, the loan still will be in default . . . IF THE DEFAULT IS NOT CURED ON OR BEFORE THE EXPIRATION DATE, THE LOAN OWNER AND WE INTEND TO ENFORCE THE LOAN OWNER’S RIGHTS AND REMEDIES AND MAY PROCEED WITHOUT FURTHER NOTICE TO COMMENCE FORECLOSURE PROCEEDINGS.”

The letter suggests that without timely and full payment of the default amount on the homeowners’ mortgage, the defendant will accelerate the loan—making the full amount “immediately due and payable”—and initiate foreclosure proceedings, the suit explains. The letter’s statement presented the plaintiffs with a “false ultimatum,” the case argues, that contradicts Seterus’ policy not to commence foreclosure proceedings as long as the borrower makes any payment, partial or not, “to bring the loan less than 45 days delinquent” prior to the expiration date.  

“[The letter] sent by Seterus to Plaintiffs and others similarly situated is a false and misleading threat of acceleration and foreclosure designed to intimidate borrowers into making payments to Seterus that are beyond their means and beyond what is necessary to avoid acceleration and save their homes from foreclosure,” the suit charges.