Cypress Loan Servicing settles foreclosure case for $2M

Cypress Loan Servicing has reached a $2 million settlement with the Massachusetts Attorney General’s Office (AGO) over allegations that it violated state foreclosure prevention and consumer protection laws.

According to the AGO, Cypress — formerly known as Rushmore Loan Management Services — allegedly put homeowners at unlawful and unnecessary risk of foreclosure by violating Section 35B, a state law enacted in 2012 to prevent avoidable foreclosures. The company will pay penalties to the state and provide restitution to impacted borrowers who lost their homes.

The settlement, filed in Suffolk County Superior Court, was reached through an assurance of discontinuance. Cypress signed the agreement but denies the allegations.

The settlement will “help ensure compliance with meaningful consumer protections and put mortgage servicers on notice that Massachusetts will not tolerate unlawful practices that put profit over people,” Attorney General Andrea Joy Campbell said in a statement. 

Under Massachusetts law, servicers must make a good faith effort to avoid foreclosure, including notifying borrowers of their right to pursue loan modifications. But the AGO claims that Cypress required borrowers to make large upfront payments — without an affordability analysis — as a condition for accessing loan modifications.

The office also alleges that Cypress made unlawful debt collection calls to consumers, exceeding the state’s limit of two such calls per week in thousands of instances. The alleged conduct occurred while the company operated as Rushmore.

Although Cypress has since sold its entire mortgage portfolio and rebranded as a master loan servicer, it retains the ability to subcontract direct loan servicing and could resume operating as a direct servicer in the future. If it does, the company will be responsible for monitoring its subservicers and ensuring compliance with state laws.

Earlier this year, Campbell also filed a lawsuit against home equity contract provider Hometap. Her office accused the company of systematically violating state consumer protection and foreclosure prevention laws, thereby putting vulnerable homeowners at risk of losing their properties.