US Attorneys General reach settlement with Nationstar Mortgage

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JACKSON, Mississippi (WJTV) – Mississippi Attorney General Lynn Fitch announced that she joined 50 other attorneys general and other federal and state agencies in reaching an $86.3 million settlement with Nationstar Mortgage.

“I am pleased to join my colleagues in all 50 states and the District of Columbia in holding Nationstar Mortgage accountable for negligent and reckless actions against their borrowers,” said Attorney General Lynn Fitch. “I will continue to work with partners across the country to protect Mississippi consumers from predatory, deceptive and unscrupulous business practices.”

The consent judgment resolves allegations that Nationstar, which does business as “Mr. Cooper,” violated consumer protection laws when servicing mortgages. The settlement provides compensation for a variety of harms that were identified in the investigation. Thousands of borrowers had problems when their loans were transferred to Nationstar, leading to foreclosure in certain circumstances.

The consent judgment, filed in the United States District Court for the District of Columbia, provides approximately $79.2 million in relief affecting 55,814 loans nationwide. It covers Nationstar’s conduct from January 1, 2011 to December 31, 2017. The consent judgment also requires Nationstar to follow a detailed set of rules, or “service standards,” in how it handles certain mortgages. These service standards are more comprehensive than the existing law and will be in place for three years from January 1, 2021.

Depending on the type of violation, affected borrowers will be entitled to $250 to $840. 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. The agreement also requires Nationtar to conduct audits and provide audit results to a committee of states to ensure compliance with the regulations. The lawsuit alleged several illegal acts and practices on the part of Nationstar,
including:

  • failing to properly oversee and implement the transfer of mortgage loans;
  • failing to correctly identify loans with pending loan modification requests when a loan was transferred to Nationtar for administration;
  • failing to timely and accurately apply payments made by certain borrowers;
  • threat of foreclosure and sending mixed messages to certain borrowers engaged in loss mitigation;
  • failing to properly process loan modification requests from borrowers;
  • failing to properly investigate and respond to borrower complaints;
  • failing to make escrow payments in a timely manner, including failure to make timely property tax payments;
  • failing to terminate borrowers’ private mortgage insurance in a timely manner;
  • collect modified monthly payment amounts on certain loans when the amounts charged for principal and interest exceed the amount of principal and interest contained in the trial plan agreement.

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