Nationstar Mortgage Returning $86M to Homeowners

By Kerry Smith

Some 5,703 Fla. borrowers could get more than $7.8M, says AG Ashley Moody, who was part of a multistate action against Nationstar, which is also known as Mr. Cooper.

TALLAHASSEE, Fla. – Homeowners with loans serviced by Nationstar Mortgage, aka Mr. Cooper, will see more than $86 million – including millions in relief for Florida homeowners – following a multistate investigation into Nationstar Mortgage, the country’s fourth-largest mortgage servicer that does business under the name Mr. Cooper. Florida Attorney General Ashley Moody was party of a multistate action by 50 attorneys general and other federal and state agencies.

“Today’s action will ensure improved servicing practices and better transparency for Floridians and homeowners nationwide,” Moody says. “I am proud to secure relief for thousands affected by this mortgage servicer’s faulty servicing practices.”

The multistate consent judgment, filed in the U.S. District Court for the District of Columbia, along with other resolutions obtained by the state mortgage regulators and the Consumer Financial Protection Bureau (CFPB) includes 5,703 Florida borrowers eligible for more than $7.8 million in relief. The money includes some payments that have already been made.

“As a result of the multistate consent judgment, more than 1,767 Florida loans are eligible for more than $900,000 in direct payments from the payment fund available in the states’ agreement,” Moody said in a statement. “Prior to the court action, and as a result of this investigation, Floridians received more than $5 million in relief for servicing errors. Floridians will also be eligible for approximately $2.2 million of the $15.6 million fund for borrowers suffering increases in mortgage payments.”

The money results from Nationstar actions from Jan. 1, 2011, to Dec. 31, 2017. The suit alleged that the Mr. Cooper company violated consumer protection laws during its servicing of mortgage loans. Under the proposed settlement, direct payments from a fund of more than $6.4 million will be available to eligible borrowers, including those who lost homes to foreclosure shortly after a service transfer to Nationstar, or those who were improperly locked out of their homes during a property inspection.

A separate fund exceeding $15.6 million will go to some borrowers for impermissible increases in mortgage payments. Some borrowers have already received more than $57.7 million in relief for harms resulting from errors during servicing transfers and processing, trial loan modifications, untimely property tax payments, overpayments for private insurance and other servicing deficiencies. The court action also includes more than $6.5 million in payments to state and federal entities for penalties, fines and costs of the investigation.

If approved by the court, the consent judgment also requires Nationstar to follow a detailed set of rules (servicing standards) in how it handles certain mortgage loans. The servicing standards are more comprehensive than existing law and will be in place for three years starting on Jan. 1, 2021.

The investigation

According to the allegation, Nationstar began purchasing mortgage servicing portfolios from competitors in 2012 and grew quickly into the nation’s largest non-bank servicer. But after Nationstar received new loan data, borrowers who sought help with payments and loan modifications sometimes fell through the cracks, and their loans went into foreclosure. Eligible borrowers in this category who file a timely claim will receive a guaranteed minimum payment of $840 as part of the consent judgment.

The investigation also uncovered other harm to borrowers resulting from Nationstar’s failure to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers that improperly changed locks on homes. These borrowers who file a timely claim are eligible to receive a guaranteed minimum payment of $250.

An agreement administrator will send claim forms to eligible borrowers in 2021. Nationstar has already provided some of the relief outlined in the agreement.

The consent judgment also requires Nationstar to conduct audits and provide audit results to a committee of states to ensure compliance with the agreement.

The lawsuit alleged other unlawful practices by Nationstar, including a failure to:

• Properly oversee and implement mortgage loan transfers

• Appropriately identify loans with pending loan modification applications when a loan was being transferred to Nationstar for servicing

• Apply payments made by certain borrowers on time and accurately

• Clearly communicate with at-risk borrowers, such as threatening foreclosure and giving conflicting messages to some borrowers engaged in loss mitigation

• Properly process borrowers’ applications for loan modifications

• Properly review and respond to borrowers’ complaints

• Make timely escrow disbursements, including the failure to remit property tax payments on time

• Terminate borrowers’ private mortgage insurance in a timely manner

• Accurately collect monthly modified payment amounts on certain loans, where the amounts charged for principal and interest exceeded the principal and interest amount contained in the trial plan agreement.

© 2020 Florida Realtors®

Reprinted with Permission. Click here to read the original article.