$500,000 to Oregon Borrowers to Settle Alleged Violations by “Mr. Cooper”
Oregon Attorney General Ellen Rosenblum announced today that mortgage servicer Nationstar will pay $86.3 million to settle allegations that the company violated consumer protection laws and to provide relief to borrowers after their loans were transferred to the company. Since 2014, Oregon has been a leader in the multistate investigation into the country’s fourth-largest mortgage servicer, which now does business as “Mr. Cooper.”
The consent judgment covers alleged misconduct by Nationstar that occurred between 2011-2017 and provides over $79 million in restitution affecting 55,814 loans nationally. Nationstar has previously paid 272 Oregon borrowers $420,569. Under the most recently negotiated terms announced today, holders of another 138 loans in Oregon are eligible for an additional $59,280.
“Homeowners have obligations to meet in order to keep their homes. Mortgage companies also have an obligation to be honest and fair with consumers – and to follow the law,” Attorney General Rosenblum said. “If they don’t, we’re going to hold them accountable.”
In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest non-bank servicer. The lawsuit alleged that as loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks. Borrowers in this category will receive a guaranteed minimum payment of $840 as part of the settlement.
Other borrowers suffered damages when Nationstar failed to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks on their homes, the lawsuit alleged. These borrowers will receive a guaranteed minimum payment of $250.
A settlement administrator will send a claim form to these newly eligible borrowers in 2021. Under the terms of the agreement, Nationstar must conduct audits and provide audit results to a committee of states to ensure compliance with the settlement.
The investigation and lawsuit alleged other unlawful acts by Nationstar, including
- Failing to properly oversee and implement the transfer of mortgage loans;
- Failing to appropriately identify loans with pending loan modification applications when a loan was being transferred to Nationstar for servicing;
- Failing to timely and accurately apply payments made by certain borrowers;
- Threatening foreclosure and conveying conflicting messages to certain borrowers engaged in loss mitigation;
- Failing to properly process borrowers’ applications for loan modifications;
- Failing to properly review and respond to borrower complaints; and
- Failing to make timely escrow disbursements, including the failure to timely remit property tax payments.
For the state’s leadership role in the lawsuit and settlement against Nationstar, Oregon will receive an additional $250,000.
In addition to the remediation, Rosenblum said Oregonians will benefit from provisions in the consent judgment that require Nationstar to follow a detailed set of rules or “servicing standards” in how it handles certain mortgage loans. These servicing standards are more comprehensive than existing law and will be in place for three years starting on January 1, 2021.
The settlement was signed by attorneys general from all 50 states and the District of Columbia. The state AGs negotiated the settlement with the state mortgage regulators and the federal Consumer Financial Protection Bureau, in separate filings. The partners also collaborated with the U.S. Trustee Program, a U.S. Department of Justice program that addresses efficiency and integrity in the bankruptcy system. The Trustee Program is finalizing a separate agreement with Nationstar to address historical servicing issues impacting borrowers in bankruptcy.
The Oregon Department of Justice (DOJ) is led by Attorney General Ellen Rosenblum and serves as the state’s law firm.