The Consumer Financial Protection Bureau (CFPB) announced today that it has entered into a settlement with Nationstar Mortgage, LLC, d/b/a “Mr. Cooper,” one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the United States. The bureau’s complaint claims that 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 (RESPA), and violated the Homeowners Protection Act of 1998 (HPA).
The bureau alleges that from January 2012 through December 2015, Mr. Cooper violated multiple federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed borrowers. Specifically, the bureau claims that Nationstar (1) failed to identify thousands of 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; (2) foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending; (3) improperly increased borrowers’ permanent, modified monthly loan payments; (4) failed to timely disburse borrowers’ tax payments from their escrow accounts; (5) failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings; and (6) failed to timely remove private mortgage insurance from borrowers’ accounts.
The detailed exhibits attached to the consent decree provide detailed guidance on the specific practices challenged and offer all servicers a very comprehensive roadmap on compliance issues.
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 proposed stipulated 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 and a $1.5 million civil penalty to the Bureau. It 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.