Press Release  AG Campbell Reaches $4.65 Million Settlement with Mortgage Loan Servicer for Unlawful Foreclosures and Deceptive Business Practices

BOSTON — Massachusetts Attorney General Andrea Joy Campbell today announced a $4.65 million settlement agreement with Delaware-based national residential mortgage loan servicer Newrez LLC – as successor by merger to Specialized Loan Servicing LLC (SLS). The settlement resolves allegations that SLS engaged in widespread unfair and deceptive servicing practices that put borrowers at unnecessary and unlawful risk of foreclosure in violation of state mortgage servicing and debt collection laws, as well as the COVID-19 foreclosure and eviction moratorium. SLS’s portfolio included nearly 24,000 properties in Massachusetts.  

As part of the settlement, Newrez will pay $4.65 million, which includes significant restitution to hundreds of consumers who experienced foreclosure while subject to SLS’s alleged unlawful practices. In addition, Newrez is required to implement extensive remedial procedures and business practices designed to protect Massachusetts borrowers and ensure future compliance with state laws, as well as provide regular reporting on its compliance with the settlement to the Attorney General’s Office (AGO). 

“SLS chose to prioritize profit over people and put thousands of Massachusetts homeowners at unnecessary risk of foreclosure, including during the financial hardship of the COVID pandemic,” said AG Campbell. “While this settlement cannot undo the pain of losing one’s home, it will deliver meaningful relief for impacted borrowers and ensure stronger protections to prevent future harm.”  

Following a comprehensive investigation into SLS’s business practices, the AGO identified numerous violations of Massachusetts’s consumer protection and foreclosure prevention laws. These practices included sending letters to consumers stating that they must cure their defaulted loans in only 33 days, when the law allows for a 90-day right to cure period; failing to take reasonable steps to avoid preventable foreclosures, including by failing to notify borrowers of their right to pursue a loan modification or lawfully process loan modification requests; and failing to provide required relief to homeowners who were financially impacted by the COVID pandemic, as required by law. The AGO asserts that by failing to comply with these essential requirements, SLS unfairly and unnecessarily put financially vulnerable homeowners at high risk of foreclosure. 

This matter is representative of AG Campbell’s commitment to advancing economic opportunity and consumer justice for all and ensuring access to safe and affordable housing. In August, AG Campbell secured a $2 million settlement with Cypress Loan Servicing to resolve allegations that the company violated state consumer protection, foreclosure prevention, and debt collection laws. Last fall, AG Campbell reached a precedent-setting settlement with Franklin Credit Management Corp., a servicer of “zombie second mortgages,” resolving allegations that the company violated the state’s consumer protection laws by improperly attempting to collect old mortgage debts. 

This matter was handled by Assistant Attorneys General Alda Chan, Daniels Bahls, and Mercy Cover, Paralegal Aidan Goldberg, Division Chief Yael Shavit, and Deputy Division Chief Michael Turi, all of the AGO’s Consumer Protection Division.   

Consumers who believe they have been subjected to an unfair or deceptive business practice, including by a landlord, may file a consumer complaint with the AGO online by visiting mass.gov/ago/consumercomplaint. 

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