Nationstar Mortgage Order to Pay Fine for Flawed Mortgage Loan Reporting, Including Victimizing Over 1,000 Maryland Borrowers
Nationstar Mortgage, which recently rebranded as “Mr. Cooper,” agreed to a $91 million fine by the Consumer Financial Protection Bureau (CFPB) for allegedly violating consumer protection laws after the Great Recession. The case could serve as a warning to companies that prey on borrowers during the pandemic.
“More than 1,000 borrowers in Maryland were harmed by Nationstar’s misconduct,” Maryland Attorney General Brian E. Frosh (D) said in a statement. “The settlement requires Nationstar to change its practices and to pay millions of dollars to those it hurt.”
The federal Consumer Financial Protection Bureau (CFPB) worked with attorneys general from all states and mortgage regulators in 53 jurisdictions in the case against Nationstar, which is the largest non-bank home loan servicer in the nation.
This settlement regards allegations that Nationstar violated consumer protection laws during its servicing of mortgage loans between 2012 and the end of 2015. The proposed CFPB agreement, if approved by the court, will bring $85 million in payments to consumers and over $6 million in fees and penalties.
Nationstar also entered into a separate settlement agreement with the US Department of Justice to address past mortgage servicing issues affecting homeowners under bankruptcy protection. Under that settlement, the Justice Department said U.S. Bank, PNC, and Nationstar will pay over $74 million in redress payments to homeowners. “Most of the remediation and corrective actions have already been taken by the servicers,” the Justice Department commented.
The CFPB complaint said Nationstar failed to identify requests for loan modifications, which are supposed to help borrowers with their payments. The company foreclosed while some homeowners were waiting for their loan modification applications to be processed - even though Nationstar had promised it would not do so.
Allegations against Nationstar included improperly increasing borrowers’ payments and misrepresenting when homeowners would be eligible to have their private mortgage insurance premiums canceled. The claim alleged that Nationstar also failed to forward real estate tax payments from escrow accounts in a timely manner.
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