AG Letitia James: BSI Financial Services agrees to payout for homeowners on LI, NY hit hard in pandemic
A Texas-based mortgage services company has agreed to pay restitution to as many as 160 homeowners statewide whom the firm had previously failed to offer state or federally mandated pandemic relief on their mortgages, said state Attorney General Letitia James. Credit: EPA-EFE/Shutterstock/Justin Lane
A Texas-based mortgage services company failed to offer mandated financial relief to homeowners, including some on Long Island, facing financial hardships during the height of the pandemic, according to state Attorney General Letitia James.
On Wednesday, BSI Financial Services Inc. agreed to pay $350,000 in penalties and restitution to as many as 160 homeowners on the Island, in New York City and Rochester who were not offered state or federally mandated mortgage relief.
“During the height of the pandemic, as we were grappling with fear, stress, and financial difficulties, these homeowners were denied the basic support they were supposed to receive," James said in a statement. “BSI violated the law and left hundreds of families worrying about keeping a roof over their heads when they qualified for mortgage relief. Today’s agreement will put money back into homeowners’ pockets and continues our efforts to protect hardworking New Yorkers.”
BSI did not respond to a request for comment on the settlement.
The attorney general's investigation determined that BSI encouraged homeowners who faced financial hardships or who lost their job during the pandemic to continue making at least partial payments on their loans.
Federal and state officials instituted regulations and passed legislation during the early days of the pandemic requiring the mortgage industry to provide temporary assistance to homeowners facing financial hardships.
Mortgage loans backed or insured by federal authorities were subject to requirements allowing homeowners facing a hardship to defer their payments for up to 12 months in 2020 and 2021. The state provided similar assistance to New York homeowners with loans that were not federally backed, officials said.
“The COVID-19 pandemic caused financial burdens to many property owners on Long Island who were not given the support they needed,” said Suffolk County Executive Steve Bellone. "With this restitution we hope to right the wrongs done at the expense of our residents."
In one instance, a homeowner told the mortgage company that he lost his business income due to the pandemic and struggled to make payments, James' office said. The BSI agent told the homeowner to use his unemployment benefits or reduced income to make partial payments, even though the homeowner was entitled to mortgage relief.
Other times, BSI allowed payments to be deferred only on a month-to-month basis, and on at least one occasion, the company told a homeowner that additional relief would be contingent on their willingness to make partial or future payments.
In each case, the settlement states, BSI failed to inform homeowners of their rights to defer their mortgage payments for up to 12 months.
The agreement requires BSI to provide restitution to certain current and former customers with privately owned mortgages whose loans were subject to relief requirements. Eligible homeowners will be contacted about this agreement and provided instructions for claiming restitution.
The firm is also required to offer forbearance relief — when a homeowner is allowed to pause or reduce their mortgage payments for a limited time — to homeowners who suffered a financial hardship but were initially denied mortgage relief from BSI. Those homeowners will also receive restitution for up to two monthly mortgage payments from BSI, officials said.
Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.
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