Select Portfolio Servicing Failed to Timely Record NY Mortgage Satisfactions, Class Action Alleges

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A proposed class action has been filed over the alleged “systematic failure” of Select Portfolio Servicing to file timely mortgage satisfactions with New York county clerks.

According to the 10-page lawsuit, the loan servicing company has failed to comply with two New York laws that require mortgagees to present to the proper county clerk a satisfaction of mortgage within 30 days of when a mortgagor has paid the entire principal and interest on their loan. Per the case, the mortgagee must pay the mortgagor $500 for failing to file a mortgage satisfaction within 30 days; $1,000 for failing to do so within 60 days; and $1,500 for failing to do so within 90 days.

The plaintiff, a Wellsville, New York resident, claims that although he satisfied his mortgage in February 2020, Select Portfolio Servicing, as of the date the proposed class action was filed, has yet to record the mortgage satisfaction with the Allegany County Clerk’s office.

The lawsuit explains that an “unfortunate consequence[]” of the consolidation of the banking industry has been the frequent failure of banks to fulfill their obligation to file timely mortgage satisfactions. Though title companies have worked with buyers and lenders to provide clear title reports in spite of “open” mortgages created by a mortgagees’ failure to timely present satisfactions, there exists “a real possibility” that the “widespread failure of banks to timely present mortgage satisfactions may disrupt the entire system for transferring residential property in New York State,” the suit asserts.

Moreover, the failure to record mortgage satisfactions can also disrupt property sales for which a marketable title is required, not to mention impair a homeowner’s credit and ability to secure a future loan, the case adds.

The plaintiff says the defendant in 2019 took over as the servicer of his mortgage loan for a Wellsville property. Per the case, the plaintiff paid to the defendant on February 29, 2020 all principal, interest and other amounts due under the loan, thereby satisfying the mortgage. The case says the mortgage satisfaction was confirmed by Select Portfolio in a letter to the plaintiff.

According to the lawsuit, however, the defendant has failed to present a certificate of discharge with the Allegany County Court’s office as of the date the complaint was filed, which the suit says is well beyond the 30-day deadline imposed by New York state law. The plaintiff claims he requested at least nine times by telephone that the mortgage satisfaction be filed prior to filing the lawsuit.

The suit alleges the defendant has similarly failed to timely file mortgage satisfactions for thousands of other homeowners.

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