The Consumer Financial Protection Bureau filed a complaint and proposed stipulated judgment and order this week against Nationstar Mortgage, LLC, which does business as Mr. Cooper. Nationstar allegedly violated multiple Federal consumer financial laws, causing “substantial harm” to the borrowers whose mortgage loans it serviced, including distressed homeowners, the bureau said.
The proposed judgment and order, if entered by the court, would require Nationstar to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It would also require Nationstar to pay a $1.5 million civil penalty to the bureau.
Nationstar engaged in unfair and deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010, violated the Real Estate Settlement Procedures Act, and violated the Homeowner’s Protection Act of 1998, according to the complaint. Specifically, between January 2012 and the end of 2015, Nationstar failed in numerous instances to identify loans in its systems that had pending loss-mitigation applications or trial-modification plans, and as a result failed to honor borrowers’ loan modification agreements. The company also foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending, the bureau said.
Nationstar also allegedly improperly increased borrowers’ permanent, modified monthly loan payments, mispresented to borrowers when they would be eligible to have their private mortgage insurance premiums canceled, and failed to timely remove private mortgage insurance from borrowers’ accounts. It allegedly failed to timely disburse borrowers’ tax payments from their escrow accounts and failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings.
“Mortgage servicers are entrusted with handling significant financial transactions for millions of Americans, including struggling homeowners. Nationstar broke that trust by engaging in unfair and deceptive practices prohibited by the Consumer Financial Protection Act of 2010, as well as violations of the Real Estate Settlement Procedures Act and the Homeowner’s Protection Act,” said CFPB Director Kathleen L. Kraninger. “Today’s action is the culmination of a multi-year effort working with our state partners to investigate Nationstar’s failings, which resulted in substantial consumer harm. We had a strong partnership with our state counterparts in this case and I thank them for all their support in this case.”
The bureau coordinated with attorneys general from all 50 states and the District of Columbia as well as bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia.
Combined with the bureau’s action, the states’ proposed judgments and orders would yield nearly $85 million in recoveries for consumers to date and more than $6 million in fees and penalties.
If entered by the court, Nationstar would be required to immediately set aside about $15.6 million to pay borrowers it has not remediated prior to the order’s effective date and to certify that it has already paid approximately $57.5 million in redress to other borrowers affected by the conduct alleged in the complaint.