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.
Continue Reading Consumer Financial Protection Bureau And Multiple States Enter Into Settlement With Nationstar Mortgage, LLC For Alleged Unlawful Servicing Practices

The Conference of State Bank Supervisors (CSBS) recently requested public comment on proposed regulatory prudential standards for nonbank mortgage servicers. The proposal seeks to address concerns about rapid market share growth, nonbank institution size, and nonbank mortgage servicers’ financial stability and governance. The goals of the proposal are to:

  • Provide better protection for borrowers, investors, and other stakeholders in the occurrence of a stress event, in which adverse circumstances affecting one or a series of companies—or alternatively, a wider market dislocation—could result in harm;
  • Enhance effective regulatory oversight and market discipline over these entities; and
  • Improve transparency, accountability, risk management, and corporate governance standards.


Continue Reading The Conference of State Bank Supervisors Proposes Regulatory Prudential Standards for Nonbank Mortgage Servicers

The Ninth Circuit recently held a company vicariously liable for the actions of a downstream vendor of text message and telephone marketing activities. The Telephone Consumer Protection Act (TCPA) is increasingly being used to bring lawsuits with potential statutory damages totaling millions or even hundreds of millions of dollars.

Companies should consider due diligence and

Mortgage service companies (and their lawyers) got a big boost on March 20, 2019, when the Supreme Court delivered a unanimous opinion in Obduskey v. McCarthy & Holthus LLP, holding that a business engaged in no more than nonjudicial foreclosure proceedings is not a “debt collector” under the Fair Debt Collection Practices Act (FDCPA or Act), except for the limited purpose of §1692f(6). This decision will prevent needless and unfair litigation by borrowers seeking to stall collection efforts.

The petitioner in the case (who purchased his home in 2007 and defaulted approximately two years later) argued that the law firm hired by the creditor bank to carry out a nonjudicial foreclosure failed to comply with the FDCPA, which requires a debt collector to cease collection efforts until it obtains and delivers verification of the debt to the debtor.

Continue Reading Justices Rule that Businesses Engaged in Nonjudicial Foreclosure Proceedings are Not “Debt Collectors” under the FDCPA