Select Portfolio Servicing has been the subject of class action lawsuits and government settlements for more than twenty years, covering force-placed insurance kickbacks, debt collection practices on discharged or accelerated loans, misleading monthly mortgage statements, loss mitigation failures, and the handling of borrowers coming out of COVID-19 forbearance. The matters below are the ones that have produced money for borrowers, binding court rulings, or ongoing litigation that affects how the Salt Lake City servicer treats the roughly 900,000 loans on its books.
The FTC Case That Created SPS
SPS did not start under that name. In November 2003, the Federal Trade Commission and the Department of Housing and Urban Development charged Fairbanks Capital Corp. with unfair, deceptive, and illegal practices in servicing subprime mortgage loans. Fairbanks paid $40 million in consumer redress and, in 2004, renamed itself Select Portfolio Servicing, Inc.1Federal Trade Commission. FTC, Subprime Mortgage Servicer Agree to Modified Settlement
A modified stipulated judgment entered in August 2007 in the U.S. District Court for the District of Massachusetts tightened the rules further. SPS was barred for five years from marketing optional products not required by the loan, required for ten years to stop “pyramiding” late fees, and ordered to apply payments to principal and interest before fees. The company also had to verify at least three missed payments and resolve any outstanding consumer disputes before starting foreclosure, and to submit to independent third-party compliance audits for ten years.2Federal Trade Commission. Modified Stipulated Final Judgment and Order, United States v. Select Portfolio Servicing, Inc. That order is the backdrop for most of the private litigation that followed.
Force-Placed Insurance Settlement
In Almanzar v. Select Portfolio Servicing Inc. (Case No. 14-cv-22586), filed in the U.S. District Court for the Southern District of Florida, borrowers alleged SPS received illegal kickbacks from insurers when it force-placed hazard insurance on their properties. SPS denied wrongdoing but settled. Class members could claim a cash award or credit of 5 to 12.5 percent of the net premium, with the exact figure depending on when and what type of policy was placed. The class covered U.S. borrowers charged under a hazard or wind-only force-placed policy by SPS between July 2010 and October 2015.3Top Class Actions. Select Portfolio Servicing Force-Placed Insurance Class Action Settlement
Debt Collection and Mortgage Statement Class Actions
Three cases built on similar Fair Debt Collection Practices Act theories, each attacking a different piece of the servicing paperwork.
Rivera v. SPS
Filed in 2016 in the U.S. District Court for the District of New Jersey, Angel Rivera v. Select Portfolio Servicing Inc. (Case No. 3:16-cv-03112) alleged SPS tried to collect unlawful late charges that varied “from day to day” on debts already discharged in bankruptcy, and failed to send the FDCPA’s required debt notice within five days of first contact.4Top Class Actions. Select Portfolio Servicing Class Action Targets Debt Collection In December 2017, the court denied SPS’s motion for reconsideration of an earlier order rejecting the company’s motion to dismiss, holding that the FDCPA claims did not require pre-suit notice under the mortgage agreement.5vLex. Rivera v. Select Portfolio Servicing, Memorandum and Order
Gaffney v. SPS
In Gaffney v. Select Portfolio Servicing, Inc., the plaintiff alleged SPS pursued mortgage-related debt after a foreclosure, including interest amounts exceeding what New Jersey law allowed. The final approved settlement was over $200,000 for a class of approximately 1,500 borrowers.6National Mortgage Professional. Plaintiffs Overcharged on Mortgage Debt Win Settlement vs. Select Portfolio Servicing Inc.
Kahn v. SPS
In Harold Kahn and Deborah Kahn v. Select Portfolio Servicing, Inc. (Case No. 7:17-cv-07540), filed in the Southern District of New York, the plaintiffs alleged SPS violated the FDCPA by sending monthly statements on accelerated loans that threatened a late fee if payment was not received by a specific date. The class consisted of New York borrowers whose loans were already more than 30 days delinquent and had been accelerated when SPS sent those statements between October 2016 and October 2017. SPS denied the allegations but agreed to a settlement fund of at least $115,000, with estimated payouts of $100 to $200 per class member. Judge Nelson S. Roman held the fairness hearing in July 2019.7Edelman, Combs, Latturner & Goodwin, LLC. Kahn v. Select Portfolio Servicing, Inc., Settlement Class Notice
Daniels v. SPS and the Mortgage-Statement Question
Whether a routine monthly mortgage statement counts as debt collection under the FDCPA matters because every borrower gets one. Daniels v. Select Portfolio Servicing, Inc. in the Eleventh Circuit tested it. The borrower alleged that monthly statements with errors in the deferred principal balance and interest-only payment amount, carrying boilerplate language stating “This is an attempt to collect a debt,” were themselves illegal debt collection. A district court dismissed the case. In May 2022, a divided Eleventh Circuit panel reversed, holding that a statement that requested payment, listed a due date and potential late fee, and included the “attempt to collect a debt” line was “plausibly related to debt collection.” The appeals court noted the collection-language disclaimer is not required by the Truth in Lending Act, which made its presence a voluntary signal of collection intent. SPS petitioned for rehearing.8Alston & Bird LLP Consumer Finance Blog. Eleventh Circuit Finds Monthly Mortgage Statement Constitutes a Communication in Connection With the Collection of a Debt
California Homeowner Bill of Rights: Reese v. SPS
Not every borrower challenge has succeeded. In Reese v. Select Portfolio Servicing, Inc. (Case No. A167637), the California Court of Appeal for the First District considered whether SPS had engaged in “dual tracking” by recording a notice of trustee’s sale while a loan modification application was pending, in violation of California’s Homeowner Bill of Rights. In a published opinion filed in December 2024, the court affirmed judgment in SPS’s favor. Even if a violation occurred in November 2016, the court held, SPS cured it by letting the original notice of sale lapse and recording a new one 18 months later, after the modification application and appeal had been denied. The court also clarified that the statute required a written determination on the application before foreclosure moved forward, not any particular outcome.9FindLaw. Reese v. Select Portfolio Servicing, Inc.
Loss Mitigation and RESPA Claims
A separate class complaint alleged SPS systematically refused to respond to borrower inquiries — Qualified Written Requests, Requests for Information, and Notices of Error — by citing a blanket claim that the issues were “part of an ongoing litigation.” The proposed class covered all U.S. borrowers who sent such inquiries and received this type of non-response.10California Department of Financial Protection and Innovation. Comment 4, Ed Vallejo
A more recent individual action, William Olivero and Glorianna Olivero v. Select Portfolio Servicing, Inc. (Docket No. MER-L-2283-24), was filed by pro se plaintiffs in New Jersey in 2024. They alleged SPS failed to properly review their loss mitigation application, respond to their appeal, or correctly identify the status of a debt that had been discharged in bankruptcy, and sought $100,000 in emotional distress damages. In July 2025, Judge Ostrer granted SPS’s motion to dismiss in part, throwing out claims under regulatory provisions with no private right of action, including claims tied to the Home Affordable Modification Program. The court let the Oliveros’ RESPA claim proceed, finding they had adequately shown a causal link between SPS’s alleged failure to make live contact and provide written notice of loss mitigation options and the damages they suffered.11New Jersey Courts. Olivero v. Select Portfolio Servicing, Inc.
COVID-19 Forbearance Lawsuits
The pandemic generated a new round of cases built on how SPS handled borrowers exiting forbearance plans.
Rothman v. SPS
In August 2024, Yosef Rothman filed a proposed class action in New York state court alleging SPS violated the Fair Credit Reporting Act and New York General Business Law. The complaint said SPS demanded that borrowers pay the full deferred balance in a lump sum rather than through installments as contemplated by Consumer Financial Protection Bureau guidance, reported accounts as delinquent when borrowers could not comply, refused to accept regular monthly payments, and used foreclosure threats to pressure lump-sum payments while generating fees and interest.12ClassAction.org. Class Action Claims Select Portfolio Servicing Gave False Data to Credit Reporting Agencies, Made Foreclosure Threats The case was removed to the Southern District of New York (Case No. 7:24-cv-07249). The court dismissed the action in December 2024 after a settlement in principle, and a stipulation of voluntary dismissal was filed in March 2025.13CourtListener. Rothman v. Select Portfolio Servicing, Inc., Docket No. 7:24-cv-07249
California Attorney General Settlement
On June 5, 2026, California Attorney General Rob Bonta announced a $4.6 million settlement with SPS over alleged violations of California’s Homeowner Bill of Rights and other state and federal mortgage servicing laws during the pandemic. The state’s investigation found that SPS failed to provide adequate information about forbearance exit options, sent mortgage statements falsely stating that late fees would be charged for payments missed during forbearance, failed to conduct tailored loss mitigation discussions with borrowers nearing the end of their plans, and failed to provide the single points of contact required for homeowners seeking foreclosure prevention. Of the $4.6 million, $3 million is earmarked for direct payments to thousands of affected homeowners, who will receive restitution automatically, and $1.6 million covers civil penalties. SPS must also implement operational changes to comply with foreclosure-prevention laws going forward. The settlement is subject to court approval.14California Attorney General. Attorney General Bonta Secures $4.6 Million Settlement for Consumer Relief From Mortgage Servicer
What This Means If SPS Services Your Loan
A few patterns run through this history and are worth checking against your own account. If you were charged for force-placed hazard or wind insurance between July 2010 and October 2015, you fell within the Almanzar class window. If SPS has tried to collect on a mortgage debt discharged in bankruptcy, or on fees or interest that look inflated after a foreclosure, that is the territory of Rivera and Gaffney. If you received monthly statements on an accelerated loan threatening late fees, or statements with figures that do not match your loan terms, Kahn and Daniels show those statements can be challenged under the FDCPA. If you exited a COVID-19 forbearance and were told to pay the full deferred balance at once, were reported delinquent after trying to resume regular payments, or live in California and lost access to forbearance exit options or a single point of contact, the Rothman settlement and the California Attorney General action address exactly that conduct. Keep the statements, the written requests you sent, and the responses (or non-responses) you received; those documents are what each of these cases turned on.