Attorney General’s legal action against Quality Loan Service results in payment to homeowners, delays foreclosures and stops deceptive practices

SEATTLE – March 28, 2014 – (RealEstateRama) — Legal action taken by the Washington State Attorney General (AGO) against foreclosure trustee Quality Loan Service Corp. of Washington (QLS) has stopped unfair and deceptive business practices. QLS is one of the largest foreclosure trustees in Washington state.

It is estimated more than 450 homeowners will receive approximately $500 each.

In addition, a moratorium was placed on all QLS foreclosures on February 27 and will extend through April 3, 2014. The AGO estimates hundreds of homeowners will benefit from this moratorium.

Foreclosure trustees are legally required to act in good faith as neutral parties between borrowers and lenders while conducting foreclosure proceedings.

“Foreclosure trustees have a duty to treat borrowers fairly under the law,” said Attorney General Bob Ferguson. “I will make sure that all parties involved in the foreclosure process, including trustees like QLS, play by the rules.”

Overview of AGO allegations

The Deed of Trust Act requires a trustee to maintain a street address with a physical presence and active telephone service in Washington state. This law ensures homeowners have a place they can go to ask questions, make last-minute payments, request a foreclosure be postponed or serve a lawsuit to halt the foreclosure.

An AGO investigation found that QLS closed its former office in Poulsbo in January 2014 and moved to an office in Seattle. It did not inform borrowers who were in the foreclosure process of the move. Additionally, some borrowers were unable to gain entry to reach QLS’s Seattle office, which was in a locked, poorly marked office building.

The AGO alleged QLS’s failure to notify borrowers of the office move and the inaccessibility of the new office were unfair and deceptive business practices and therefore violated the Consumer Protection Act.

On February 26, 2014, the AGO filed a motion in King County Superior Court to obtain a Temporary Restraining Order against QLS to halt impending foreclosures.

QLS entered into an interim Agreed Order that led to the Consent Decree announced today.

Overview of QLS obligations under Agreed Order

As a result of AGO legal action, QLS must:
Pay $250,000 to foreclosed homeowners who were foreclosed upon by QLS from January 1 to February 27, 2014;
Place a moratorium on all QLS foreclosures that is effective for six weeks, from February 27 until April 3, 2014 — AGO estimates hundreds of homeowners will benefit from this moratorium. Foreclosure sales can begin again on April 4, 2014;
Cancel and restart the foreclosure process for approximately two dozen homeowners, resulting in a four-month delay in the foreclosure process for these homeowners;
Maintain a physical presence in Washington; and
Pay $25,000 to cover the AGO’s costs and attorney’s fees.

In addition, QLS already took action following the AGO’s initial court action to ensure homeowners can now gain access to its office in Seattle. QLS also sent a notice informing homeowners of its change of address.

The AGO will contact eligible foreclosed homeowners — those whose properties were foreclosed upon after QLS moved from Poulsbo to Seattle, but before the AGO’s legal action — to distribute payments.

Homeowners whose properties are scheduled for foreclosure are encouraged to contact a housing counselor or attorney to pursue foreclosure alternatives and protect their rights.

All homeowners who are facing foreclosure should call a certified home counselor for free at 1.877.894.HOME (4663).

Assistant Attorneys General Todd Bowers and Ben Roesch are leads on this case.

The Consent Decree can be found, here.
CCONTACTS:

Janelle Guthrie, Director of Communications, (360) 586-0725, janelleg (at) atg.wa (dot) gov
Alison Dempsey-Hall, Deputy Comm. Director, (206) 442-4482, alisond (at) atg.wa (dot) gov