Unfair Servicing Practices – General

A third party loan servicer or student loan servicer may not use unfair or unconscionable means in servicing any loan. Without limiting the general application of the foregoing, the following conduct is a violation of 209 CMR 18.40: (1) Knowingly misapplying or recklessly applying loan payments to the outstanding balance of a loan. (2) Knowingly misapplying or recklessly applying payments to escrow accounts. (3) Requiring the unnecessary forced placement of insurance, when adequate insurance is currently in place. (4) Failing to provide loan payoff information within five business days of a receipt of a written request. (5) Charging excessive or unreasonable fees to provide loan payoff information. (6) Knowingly or recklessly providing inaccurate information to a credit bureau, thereby harming a consumer’s creditworthiness. (7) Failing to report both the favorable and unfavorable payment history of the consumer to a nationally recognized consumer credit bureau at least annually if the servicer regularly reports information to a credit bureau. (8) Knowingly or recklessly facilitating the illegal repossession of chattel collateral. (9) Misrepresenting any material information in connection with the servicing of the loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a loan, the terms and conditions of the servicing contract or the borrower’s obligations under the loan. (10) Failing to maintain procedures to ensure accuracy and timely updating of borrower’s account information, including posting of payments and imposition of fees. (11) Requiring funds to be remitted by means more costly to the consumer than a bank or certified check or attorney’s check from an attorney’s account. (12) Refusing to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided that the third party loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower. (13) Failing to establish and implement policies and procedures to ensure effective monitoring and oversight of law firms, subservicers, foreclosure firms, foreclosure trustees and other third party providers, agents or affiliates retained by or on behalf of the third party loan servicer to ensure that such third parties are complying with the pertinent state and federal laws and regulations governing third party loan servicers, including, but not limited to, the provisions of 209 CMR 18.00.