Banking and Finance Law Daily CFPB, states charge mortgage loan company with unlawful servicing practices
Monday, December 7, 2020

CFPB, states charge mortgage loan company with unlawful servicing practices

By Katalina Bianco, J.D.

The CFPB joined a multistate group of state attorneys general and state bank regulators in the action against Nationstar Mortgage, LLC, for violating federal consumer financial laws and causing "substantial harm" to mortgage loan borrowers.

The Consumer Financial Protection Bureau combined forces with numerous state attorneys general and state bank regulators to charge mortgage loan servicing company Nationstar Mortgage, LLC, for unlawful servicing practices in violation of federal consumer compliance laws. The CFPB filed a complaint and proposed stipulated judgment and order against Nationstar that would require Nationstar to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It would also require Nationstar to pay a $1.5 million civil penalty to the Bureau. Attorneys general from all 50 states and the District of Columbia and bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia also settled with Nationstar.

In its complaint, the Bureau alleges that Nationstar engaged in unfair and deceptive acts and practices in violation of the Consumer Financial Protection Act of 2010 (12 U.S.C. §§ 5531, 5536), Real Estate Settlement Procedures Act (RESPA, 12 U.S.C. §§ 2605, 2617) and Regulation X’s Mortgage Servicing Rule (12 CFR § 1024), and the Homeowner’s Protection Act of 1998 (12 U.S.C. §§ 4902(a) and 4902(b)).

Specifically, the Bureau alleges that between January 2012 and Jan. 1, 2016, Nationstar failed to identify 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. Nationstar allegedly foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending and also allegedly: improperly increased borrowers’ permanent, modified monthly loan payments; mispresented to borrowers when they would be eligible to have their private mortgage insurance premiums canceled; and failed to timely remove private mortgage insurance from borrowers’ accounts. Nationstar allegedly failed to timely disburse borrowers’ tax payments from their escrow accounts and failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings.

The Bureau’s and states’ proposed judgments and orders are part of a larger government effort, including assistance from the Special Inspector General for the Troubled Asset Relief Program and the United States Trustee Program, to address Nationstar’s alleged unlawful mortgage loan servicing practices.

Companies: Nationstar Mortgage, LLC

MainStory: TopStory CFPB DistrictofColumbiaNews EnforcementActions Loans Mortgages PuertoRicoNews RESPA UDAAP VirginIslandsNews

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