Wednesday , 6 January 2021

Mr. Cooper in Hot Water with the CFPB

The Consumer Financial Protection Bureau (CFPB) has filed a complaint and proposed a stipulated judgment and order against Nationstar Mortgage LLC, which does business as Mr. Cooper.

The CFPB’s action is part of a coordinated effort between the bureau, a multistate group of state attorneys general, and state bank regulators. The bureau alleges that Nationstar violated multiple federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners.

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 CFPB.

Attorneys general from all 50 states and the District of Columbia – along with bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia – have also settled with Nationstar, and their settlements are reflected in separate actions, concurrently filed in the United States District Court for the District of Columbia.

Specifically, the bureau alleges that between January 2012 and January 1, 2016, in numerous instances Nationstar failed to identify loans on its systems that had pending loss mitigation applications or trial modification plans and, as a result, failed to honor borrowers’ loan modification agreements. Nationstar allegedly foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending.

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. Nationstar 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.

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.

The stipulated judgment and order would also require Nationstar, among other things, to enhance its policies and processes including with respect to handling consumer complaints and disputes, conducting escrow analyses on borrowers’ accounts, transferring information during servicing transfers, offering loss mitigation, and terminating borrowers’ private mortgage insurance.

“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,” says CFPB Director Kathleen L. Kraninger.

Nationstar is one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the U.S.

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