Massachusetts Attorney General Settles with Mortgage Servicer for $2 Million: The States Are Still Out There
On August 7, 2025, the Massachusetts Attorney General (“AG”) announced a $2 million settlement with a Texas-based residential mortgage loan servicer (“Servicer”), resolving alleged violations of Massachusetts foreclosure prevention and debt collection laws.
The AG alleged that the Servicer engaged in violations of the Massachusetts foreclosure prevention law, Mass. Gen. Laws ch. 244, § 35B, which was enacted in 2012 in the wake of the great recession as part of the “Act Preventing Unlawful and Unnecessary Foreclosures.” This section requires, according to specified timelines and criteria, a pre-foreclosure notice to borrowers regarding the ability to obtain a modification, a response to a borrower request for a modification, and an assessment of the borrower’s ability to pay a modified mortgage payment. The AG’s complaint alleged that the Servicer failed to comply with the required timelines, to respond at all in connection with borrower modification requests, and to include downpayments it required to obtain a loan modification in its ability-to-pay assessments. The AG also alleged that the Servicer violated Massachusetts debt collection regulations by calling borrowers more than permitted and failing to provide debt validation notices.
The settlement requires the Servicer to take certain affirmative actions, which include, when acting as a master servicer, providing copies of subservicing contracts to the AG and overseeing subcontractor compliance, and providing certain data to the AG when acting as a subservicer. In addition, the Servicer was required to pay $2 million to the AG.
This settlement is another indication that states have stepped up their enforcement of consumer financial protection laws in response to the CFPB being sidelined by the Trump administration. This serves as a reminder that mortgage lenders, brokers, and servicers should continue to stay focused on compliance, because despite the CFPB being out of the picture these days, the federal laws are still on the books, and the state regulators and attorneys general are still out there.
If you would like to discuss any of the issues in this post, please email me at rich@garrishorn.com.
