New York Attorney General Letitia James announced an agreement that requires a group of mortgage debt buyers to pay more than $482,000 in penalties and restitution after investigators found the companies pursued payments that were no longer legally collectible.
What the settlement requires
The firms — identified by the Attorney General’s Office as BCMB1 Trust, First Age, NS194, Second Start, Southern MBA Trust and affiliates — acquired more than 3,000 defaulted mortgages in New York beginning in 2019, according to the office.
Investigators found the companies filed more than 140 foreclosure lawsuits and in many cases sought full balances and interest extending back as far as 12 years, including demands that the Attorney General’s Office said exceeded New York’s six-year statute of limitations for collecting those debts.
- The companies must pay $240,000 in penalties.
- They must provide more than $242,000 in restitution to consumers who paid or agreed to repay expired debts.
- The agreement bars the firms from seeking those expired payments in ongoing foreclosure cases and from demanding them in the future.
| Item | Amount or count |
|---|---|
| Penalties | $240,000 |
| Restitution | more than $242,000 |
| Total required payment | more than $482,000 |
| Mortgages acquired and reviewed | more than 3,000 |
| Foreclosure lawsuits filed | more than 140 |
How homeowners were affected
According to the Attorney General’s Office, many of the loans were second mortgages issued before the 2008 financial crisis. During the Great Recession, primary mortgages were often modified while servicers stopped pursuing payments on the secondary liens. Those second-mortgage debts sat unpaid for years, often with little or no communication to homeowners, the office said.
Investigators determined the debt buyers pursued interest and full balances going back up to 12 years — beyond the state’s six-year limitations period for collecting on such claims. Under the agreement, debt buyers must remove demands for expired payments from ongoing foreclosure cases and are barred from seeking them going forward.
Consumer help and contact information
The Attorney General’s Office said homeowners who believe they faced an improper foreclosure or unlawful collection attempts can contact the office’s Consumer Frauds and Protection Bureau at 1-800-771-7755.
The settlement addresses a pattern of post-crisis purchases of defaulted second mortgages and aggressive collection tactics by debt buyers. It could prompt other state enforcement offices to examine similar practices where old debts and weak documentation lead to resumed collection efforts years after lenders stopped trying to collect.
