Did Nationstar foreclose on your home? You could be entitled to receive a refund for illegal foreclosure! Servicer Mr. Cooper will pay $90 Million in refunds to customers, in addition to $6.5M in penalties.
For the third time in the last six months, Nationstar Mortgage, the nonbank also known as Mr. Cooper, has reached a multi-million-dollar settlement with a state banking regulator over mortgage-related issues.
Back in December, Nationstar reached a $9.2 million settlement with the California Department of Business Oversight to resolve allegations that the company “overcharged borrowers and failed to properly investigate consumer complaints.”
One month later, the state of Massachusetts hit Nationstar with a fine and sanctions for allegedly putting hundreds of borrowers in the state at a heightened risk of foreclosure by offering them “unfair and deceptive” mortgage modifications.
When Mr. Cooper – then known as Nationstar – bought thousands of mortgages through MSR bulk purchases, it frequently failed to identify loans with existing modifications, according to the lawsuit, which was filed by the Consumer Financial Protection Bureau. Those modifications allowed the borrower to make trial payments, which would then require the servicer to permanently modify the loans.
Mr. Cooper, the nation’s largest non-bank servicer of mortgage loans, will refund customers nearly $90 million and pay a civil penalty of more than $6.5 million to settle a lawsuit claiming it violated the rights of over 115,000 customers, some of whom it had illegally foreclosed on.
But Mr. Cooper often didn’t take those mods into account, and then foreclosed on thousands of those borrowers, damaging their finances and credit, the CFPB and state attorneys generals for 53 states and territories said on Monday.
Specifically, the CFPB alleged that between Jan. 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.
- Foreclosed on borrowers to whom it had promised it would not foreclose while their loss mitigation applications were pending
- 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.
- 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.
According to the release, if entered by the court, Mr. Cooper would be required to immediately set aside about $15.6 million to pay borrowers it has not remediated prior to the order’s effective date and to certify that it has already paid approximately $57.5 million in redress to other borrowers affected by the conduct alleged in the complaint.
Mr. Cooper services over 3 million mortgages in the U.S., with a total of over $500 billion in unpaid balance.