Mortgage servicer Fay Servicing will pay $3.2 million for fraud in Massachusetts, AG said.

Mortgage servicers nationwide will pay Massachusetts consumers $3.2 million in settlements with the Office of the Attorney General for allegations of unfair and deceptive conduct.

Fay Servicing notifies borrower that homeowner failed to take necessary steps to avoid foreclosure, harassed consumer with excessive debt collection calls, and rights to request verification of debt amount I was accused of failing to do so and improperly charging foreclosure-related fees. Authorities will carry out a foreclosure, her AG office said in a news release Wednesday.

“Mortgage servicers must make good faith efforts to prevent unnecessary foreclosures and keep Massachusetts families at home,” said AG Maura Healey. “This settlement puts money back in the pockets of injured borrowers and helps ensure that this company complies with the law.”

According to Healey’s office, Fay Servicing violated the state’s law against illegal and unnecessary foreclosure known as 35B. The law requires businesses to provide notice and opportunity for borrowers to apply for and be reviewed for loan modifications, and to consider solvency and affordability of modifications.

Fay Servicing offered a modification that required borrowers to pay a large up-front “good faith down payment”, which had not undergone an affordability analysis.

Furthermore, Fay Servicing failed to complete a timely review of the loan modification application, disclose the reasons for its denial, or notify the borrower of its right to counteroffer. They also failed to provide their clients with the legally required written valuations, including the company’s calculations of their income, liabilities, and obligations, and initiated the foreclosure process before they had the authority to do so.

Fay Servicing employees are also said to have made excessive debt collection calls exceeding the legal limit of two calls in seven days. The law also requires that debt collectors notify borrowers of their right to verify the amount owed, but the company fails to do this for hundreds of its customers.

Under the settlement, the company will pay affected homeowners $2.7 million in the form of principal forgiveness on eligible loans, pay the state $500,000, and change business practices.

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