Attorney General Mark Brnovich has joined with 50 other attorneys general and other federal and state agencies to reach an $86.3 million settlement with Nationstar Mortgage. Arizona will receive more than $1.4 million in relief. Nationstar is the country’s fourth-largest mortgage servicer.
The consent judgment resolves allegations that Nationstar, which does business as “Mr. Cooper,” violated consumer protection laws during its servicing of mortgage loans. The settlement provides restitution for a variety of harms that were identified in the investigation. Thousands of borrowers nationwide had problems when their loans were transferred to Nationstar, which may have led to foreclosures for more than 200 Arizonans.
The consent judgment, filed today in the U.S. District Court for the District of Columbia, provides that approximately $79.2 million in relief affecting 55,814 loans nationally. It covers conduct by Nationstar from Jan. 1, 2011, until Dec. 31, 2017.
In Arizona, the settlement affects 1,457 loans for a total of $1,481,490.57.
The consent judgment also requires Nationstar to follow a detailed set of rules or “servicing standards” in how it handles certain mortgage loans. These servicing standards are more comprehensive than existing law and will be in place for three years starting on Jan. 1, 2021.
The settlement was signed by attorneys general from all 50 states and the District of Columbia. The state AGs negotiated the settlement with the state mortgage regulators and the federal Consumer Financial Protection Bureau, which filed separate settlement documents. The partners also collaborated with the U.S. Trustee Program, which is finalizing a separate agreement with Nationstar to address historical servicing issues impacting borrowers in bankruptcy.
In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest non-bank servicer. As loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks, the multistate lawsuit alleged. In Arizona, 213 borrowers in this category will receive a guaranteed minimum payment of $840 as part of the settlement.
Other borrowers suffered damages when Nationstar failed to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks on their homes, the lawsuit alleged. In Arizona, around 200 borrowers will receive a guaranteed minimum payment of $250.
The lawsuit alleged other unlawful acts and practices by Nationstar, including:
- Failing to properly oversee and implement the transfer of mortgage loans;
- Failing to appropriately identify loans with pending loan modification applications when a loan was being transferred to Nationstar for servicing;
- Failing to timely and accurately apply payments made by certain borrowers;
- Threatening foreclosure and conveying conflicting messages to certain borrowers engaged in loss mitigation;
- Failing to properly process borrowers’ applications for loan modifications;
- Failing to properly review and respond to borrower complaints;
- Failing to make timely escrow disbursements, including the failure to timely remit property tax payments;
- Failing to timely terminate borrowers’ private mortgage insurance;
- Collecting monthly modified payment amounts on certain loans where the amounts charged for principal and interest exceed the principal and interest amount contained in the trial plan agreement.
Today’s agreement also requires Nationstar to conduct audits and provide audit results to a committee of states to ensure compliance with the settlement.
This case for Arizona was handled by Bankruptcy, Collections, and Enforcement Section Chief Don Lawrence.
What do Arizona consumers need to do?
A settlement administrator will send a claim form to eligible borrowers in 2021. Nationstar has already provided some of the relief outlined in the settlement during the course of the states’ investigation.
Copy of the Complaint.