For Immediate Release:
Monday, December 7, 2020
Laura Brewer (919) 716-6484
(RALEIGH) Attorney General Josh Stein today reached a $86.3 million settlement with Nationstar Mortgage, the nation’s fourth-largest mortgage servicer. In North Carolina, 1,938 borrowers will receive a combined $1,940,880.50 in relief.
“Nationstar failed to uphold its responsibility to borrowers,” said Attorney General Josh Stein. “As a result, people suffered real financial damage, and sometimes lost their homes. The financial relief they will receive as a result of this settlement will be critical to their ability to move forward. Additionally and importantly, Nationstar will be required to change the way it does business to protect its customers going forward.”
The settlement provides restitution for a variety of harms that were identified in the investigation. Affected borrowers will receive guaranteed minimum payments based on the damages they suffered. In the coming weeks, a third-party settlement administrator will send a claim form to eligible borrowers to help them file claims and receive their payments.
The settlement resolves allegations that Nationstar, which does business as “Mr. Cooper,” violated consumer protection laws during its servicing of mortgage loans from Jan. 1, 2011, to Dec. 31, 2017. In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest non-bank servicer. Thousands of borrowers had problems when their loans were transferred to Nationstar.
The lawsuit alleged that Nationstar failed to properly oversee and implement mortgage loan transfers and modifications, failed to accurately apply payments or process applications, did not properly review and respond to borrower complaints, and threatened foreclosure and gave borrowers conflicting messages about their loans. Borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks, suffered damages when Nationstar failed to oversee inspection and maintenance of properties by third parties, and in some cases, were forced into foreclosure.
As a result of the settlement, Nationstar is required 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. Nationstar must also conduct audits and provide audit results to a committee of states to ensure compliance with the settlement.
Today’s announcement reflects the success of collaborative efforts among state and federal law enforcement partners, including the United States Trustee Program (USTP), a component within the Department of Justice that seeks to promote the efficiency and protect the integrity of the bankruptcy system. The USTP is finalizing a separate agreement with Nationstar to address historical servicing issues impacting borrowers in bankruptcy.
Attorney General Stein is joined in today’s settlement by state mortgage regulators, the Consumer Financial Protection Bureau, and the attorneys general of all other 49 states and the District of Columbia.