The largest nonbank mortgage servicer in the United States reached concurrent settlements with the CFPB, state attorneys general and state bank regulators concerning allegations of unfair and deceptive mortgage loan servicing practices.
The CFPB alleged that the mortgage servicer violated multiple federal consumer financial laws. As alleged in the CFPB's Complaint, the servicer:
- failed to identify and honor pending loan modification applications, foreclosed on borrowers to whom the servicer promised foreclosure holds while the borrowers applied for loan modifications, and impermissibly increased borrowers' monthly payments, in violation of Sections 1031 ("Prohibiting Unfair, Deceptive, or Abusive Acts or Practices") and 1036 ("Prohibited Acts") of Dodd-Frank;
- mishandled borrowers' escrow accounts through untimely disbursements and improperly-conducted escrow analyses, in violation of Sections 2605 ("Servicing of Mortgage Loans and Administration of Escrow Accounts") and 2617 ("Authority of CFPB") of the Real Estate Settlement Procedures Act and the regulations thereunder at Regulation X; and
- mishandled the removal of private mortgage insurance from borrowers' accounts, in violation of Sections 4902(a) and (b) of the Homeowners Protection Act.
The mortgage servicer neither admited nor denied the allegations in the Complaint. Attorneys general from all 50 states and the District of Columbia, as well as bank regulators from 53 jurisdictions, also settled with the mortgage servicer in separate actions.
The settlement requires the mortgage servicer to pay nearly $91 million in consumer recoveries, fees and penalties. The CFPB's Proposed Judgment and Order requires the mortgage servicer to set aside approximately $15.6 million for borrower remediation and certify that it has already paid approximately $57.5 million in redress to borrowers affected by the conduct alleged in the Complaint. The settlement also requires the mortgage servicer to enter into a comprehensive Compliance Plan with the CFPB.
Primary Sources
- CFPB Press Release: Consumer Financial Protection Bureau and Multiple States Enter into Settlement with Nationstar Mortgage, LLC for Unlawful Servicing Practices
- CFPB Complaint: Nationstar Mortgage LLC, d/b/a Mr. Cooper
- CFPB Proposed Stipulated Final Judgment and Order: Nationstar Mortgage LLC, d/b/a Mr. Cooper
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