HARRISBURG, Pa. (WTAJ) — Attorney General Josh Shapiro, as part of a multistate effort, announced that his office obtained an $86.3 million settlement from Nationstar Mortgage, the country’s fourth-largest mortgage servicer.
He is joined by 49 other Attorneys General, the District of Columbia, and other state and federal agencies. The settlement in the form of a consent judgment, filed in the U.S. District Court for the District of Columbia, resolves allegations that Nationstar, which does business as “Mr. Cooper,” violated consumer protection laws. In Pennsylvania, the settlement affected 2,234 loans for a total of $2.75 million in restitution for these borrowers.
“This company failed to follow the law and took advantage of Pennsylvania consumers looking for help on their loans,” said AG Shapiro. “I appreciate the work of this multistate group and the consumer advocates in our office who secured this settlement and will provide borrowers with relief.”
The settlement provides consumer restitution as the result of an investigation that covered Nationstar’s conduct between Jan. 1, 2011 and Dec. 31, 2017.
The investigation found that, as loan data was transferred to Nationstar when they acquired other companies’ portfolios, some borrowers who had sought assistance with payments and loan modifications fell through the cracks. These borrowers will receive a guaranteed minimum payment of $840 as part of the settlement.
The investigation also found that Nationstar neglected to correct hired third party companies, who changed the locks on homes of borrowers that couldn’t pay loans on time. These buyers will receive a guaranteed minimum payment of $250.
A settlement administrator will send eligible borrowers a claim form in 2021.
In addition to the payout, the settlement requires Nationstar to follow, for three years beginning Jan. 1, 2021, a detailed set of rules that are more comprehensive that existing law in how it handles certain mortgage loans. Nationstar will also have to conduct audits and provide audit results to a committee of states to ensure it is complying with the settlement.
The lawsuit also alleged that Nationstar conducted several other unlawful acts and practices, 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;
- failing to make timely escrow disbursements, including the failure to timely remit property tax payments;
- failing to timely terminate borrowers’ private mortgage insurance;
- collecting monthly modified payment amounts on certain loans where the amounts charged for principal and interest exceed the principal and interest amount contained in the trial plan agreement.
Eligible consumers do not need to do anything to receive relief, but anyone with questions can file complaints by accessing the online form at www.attorneygeneral.gov/submit-a-complaint/consumer-complaint/