On June 18, 2024, the Bureau issued an order against NOVAD Management Consulting, LLC (NOVAD). NOVAD ran a loan-servicing operation that serviced home equity conversion mortgages, or reverse mortgage loans, on behalf of the Department of Housing and Urban Development (HUD). The loans were designed to enable elderly homeowners to convert the equity in their homes to monthly streams of income or lines of credit, and borrowers were required to be 62 or older to qualify. NOVAD was responsible for servicing up to 150,000 reverse mortgage loans each year from September 2014 through 2022. The Bureau found that NOVAD sent borrowers repayment or “due and payable” letters that often falsely conveyed that their loans were in default and that the full amount of their loan was due. The Bureau also found that NOVAD failed to effectively service borrowers’ reverse mortgages, including by routinely failing to acknowledge, timely respond to, and substantively respond to borrowers’ time-sensitive information requests and error notices; failing to acknowledge, investigate, and correct servicing errors; and failing to engage in two-way communications with borrowers, including after sending repayment letters to borrowers. NOVAD’s conduct resulted in borrowers losing out on home sales, paying unnecessary costs, and fearing foreclosure. The Bureau found that such conduct violated the Consumer Financial Protection Act of 2010’s prohibition against unfair, deceptive, and abusive acts and practices, the Real Estate Settlement Procedures Act (RESPA), and RESPA’s implementing regulation, Regulation X. The order permanently bans NOVAD from reverse mortgage servicing and requires NOVAD to pay a $1 civil money penalty.

The Bureau separately took action against Sutherland Global Services, Inc., Sutherland Mortgage Services, Inc., and Sutherland Government Solutions, Inc., in their role as a subcontractor to NOVAD in performing reverse-mortgage servicing under contracts with HUD. The order against Sutherland permanently bans Sutherland Global Services and Sutherland Government Solutions from reverse mortgage servicing and requires Sutherland Mortgage Services to develop a plan to come into compliance with the law before the company may engage in reverse mortgage servicing. The order also requires Sutherland to pay $11.5 million in consumer redress, to be administered by the Bureau, and a $5 million civil money penalty.

Related documents

Consent Order

Stipulation

Press release

CFPB Takes Action Against Sutherland Global and NOVAD Management Consulting for Reverse Mortgage Servicing Failures

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