Debt Collector Harassment Costs Green Tree Millions

Washington, DCDebt collector harassment can come in many forms and from many different purveyors of angst and unfairness. In this case, the harassment came at the hands of a mortgage servicing company that was alleged to have stooped to various forms of bill collector harassment, including multiple calls per day and sometimes as early as 5 am with threats of arrest, seizure of property and foreclosure.

Well, the US Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) refused to allow that kind of behavior, and summarily slapped Green Tree Servicing LLC with a debt collector lawsuit.

On April 21, the parties agreed to a $63 million settlement. According to terms of the proposed settlement, the defendant will pay $48 million to affected customers, together with a civil penalty in the amount of $15 million.

There are various reasons why homeowners will get behind on their mortgage payments - sudden illness, unexpected job loss or unforeseen financial hardship. Few, if any, will ever allow mortgage payments to lapse deliberately, or with malice. And yet, Green Tree was accused of bill collector harassment practices that included abusive language, name-calling (“deadbeats”), mocking illnesses and hardships.

There are various tenets and statutes that govern just how and when a bill collector can pursue a debt. For example, requests for payment have to be polite and reasonable. Debtors should not be bothered at work, especially if bill collectors are specifically requested not to do so.

And yet, the bill collector lawsuit brought by the FTC and the CFPB accused Green Tree of doing just that - making calls to the workplace and leaving several messages per day. The FTC claims that Green Tree debt service agents at times used loud and abusive language.

Green Tree is also accused of withdrawing funds from the bank accounts of consumers without their prior consent. There were also allegations that debtors were pressured into making payments via a third-party service known as “Speedway” that charged a $12 “convenience fee” on each transaction.

And it doesn’t stop there. Green Tree was alleged to have told consumers they owed fees they actually didn’t owe at all, and that they were required to make higher mortgage payments than their mortgage contracts actually spelled out.

“It’s against the law for a loan servicer to lie about the debts people owe, or threaten and harass people about their debts,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement. “Together, the FTC and CFPB are holding Green Tree responsible for mistreating homeowners, including people in financial distress.”

The bill collector lawsuit is Federal Trade Commission et al v. Green Tree Servicing LLC, Case No. 0:15-cv-02064 in the US District Court for the District of Minnesota.