Mortgages are the largest items in most people’s credit portfolios, and errors in mortgage servicing can have major impacts on mortgage holders’ lives. In this class action, plaintiff Eugenia Rapp alleges that mortgage servicer Ditech did not keep accurate records or use adequate dispute-reporting processes, so that it violated both the Real Estate Settlement Procedures Act (RESPA) and the Fair Credit Reporting Act (FCRA).
The class for the class action counts of this lawsuit includes all persons living in the US
According to the complaint, in 2012 Rapp entered into a Home Affordable Modification Program Plan with Bank of America and made all payments as instructed. Later, the servicing of her mortgage was later taken over by Ditech, which was known at the time as Green Tree, and, the complaint says, Rapp continued to make all payments as required.
However, in September of 2015, the complaint claims, Rapp found that her credit reports listed her, erroneously, as being 180 days past due for the period of July 2013-February 2014, and thirty days past due for May-July 2015.
Both RESPA and the Consumer Financial Protection Bureau regulations forbid mortgage servicers from providing to credit reporting agencies derogatory information which has been properly disputed for sixty days. The complaint alleges that Rapp wrote letters to the credit bureaus to dispute the items, providing documentation of the mortgage modification program and her payments. However, the complaint alleges, Ditech failed to make a proper investigation and the negative information continued to appear on Rapp’s credit reports.
Even worse, the complaint alleges, although Rapp continued to make all monthly payments as required, she received a formal notice dated January 17, 2017, saying—erroneously—that she was in default and owed $4,366.07. The complaint claims that Rapp continued to send dispute letters to the credit reporting agencies and sent a notice of the error to Ditech as well, with documentation, but that Ditech continued to send the erroneous information to the credit reporting agencies. Again in April, the complaint says, she sent another dispute letter and documentation to Ditech, but the company still continued to give out the erroneous information.
The complaint alleges that that Ditech violated RESPA because it did not have in place policies and procedures to cease reporting the erroneous information during the sixty days following a dispute letter, and that it violated FCRA because it did not fully and properly investigate and resolve the dispute with Rapp.
The complaint mentions a 2015 article in an earlier Federal Trade Commission–Consumer Financial Protection Bureau case against Ditech when it was still called Green Tree. The title of the article was, “Will a $63 million FTC-CFPB settlement encourage Green Tree to turn over a new leaf?”