AG settles with mortgage servicer that failed to offer relief during pandemic

New York Attorney General Letitia James on Wednesday announced a $350,000 settlement with a mortgage server that failed to offer mandated mortgage relief to homeowners who could not make payments at the height of the COVID-19 pandemic.

According to the Attorney General’s office, BSI Financial Services Inc. encouraged homeowners who faced financial hardships or lost their job during the pandemic to continue making partial payments on their loans and did not offer mandatory relief.

BSI agreed to pay $350,000 in penalties and restitution to as many as 160 homeowners in Rochester, New York City, and Long Island.

“BSI violated the law and left hundreds of families worrying about keeping a roof over their heads when they qualified for mortgage relief,” James said in a news release.

At the start of the COVID-19 pandemic, federal and state authorities passed laws and regulations requiring the mortgage industry to provide temporary assistance to homeowners facing financial hardship. Mortgage loans backed or insured by federal authorities were subject to certain requirements that allowed homeowners facing a hardship to defer their mortgage payments for up to 12 months in 2020 and 2021. New York provided similar assistance to homeowners with loans that were not federally backed, which required mortgage servicers to offer similar relief to homeowners with privately owned mortgages.

The agreement requires BSI to provide restitution to customers with privately owned mortgages whose loans were subject to relief requirements. BSI is required to offer forbearance relief to homeowners whose mortgage loans are currently serviced by BSI and who suffered a financial hardship but were initially denied mortgage relief.

In addition, BSI will provide restitution of up to two monthly mortgage payments to homeowners whose loans were previously serviced by BSI and who suffered a financial hardship, but who were not offered mortgage relief.

Eligible homeowners will be contacted about this agreement and provided instructions for claiming restitution.

“As our city and citizens recover from those unprecedented times, it is heartening to know that when our federal and state partners pass laws to protect us, the system works, and those laws are enforced,” said Rochester Mayor Malik D. Evans.