The state Department of Commerce and Consumer Affairs Division of Financial Institutions (DFI), in coordination with state and federal government partners, closed a multiyear investigation of Nationstar Mortgage LLC, d/b/a Mr. Cooper, one of the largest mortgage servicers in the nation.
Significant consumer remediation and penalties were imposed on the company for multiple residential mortgage origination and servicing-related violations of state and federal laws, including impermissible mortgage origination fees and charges; missed tax payments from borrower escrow accounts; failure to terminate private mortgage insurance when conditions were met; mishandling of loan modifications and servicing transfers; and wrongful foreclosures.
These violations affected more than 115,000 consumers nationwide.
In taking action, DFI joined with 52 other state regulators, 51 state attorneys general and the federal Consumer Financial Protection Bureau. The special inspector general for the Troubled Asset Relief Program and her staff provided technical support during the examination resolution process.
The coordinated government agreements assessed four main penalties and organization changes:
1) Refunds and other redress approaching $90 million to more than 115,000 consumers in 53 states and jurisdictions
2) Civil monetary penalties and government reimbursement in excess of $6.5 million
3) Enhanced servicing standards for three years
4) Additional regulatory oversight and corporate disclosure going forward to ensure the company maintains adequate risk and compliance programs
In Hawaii, the order includes redress of $202,005 for 166 consumers and civil penalties totaling $750,000 to be distributed among participating states and jurisdictions.
“This settlement reflects the importance of working together with other states and the CFPB on the large scope examination areas, to improve the safety and soundness of Mr. Cooper and protect consumers,” said Commissioner of Financial Institutions Iris Ikeda. “One of the more important areas of compliance included ordering Mr. Cooper to make changes to its systems to unify its mortgage servicing systems in order to deliver consistent service to consumers,” continued Commissioner Ikeda.
Today’s final order resolves all outstanding issues flowing from coordinated CFPB and state regulator examinations that began in 2014. State regulators retain jurisdiction over this order and nothing in the agreement impacts state regulators from supervising the ongoing licensing and compliance obligations of Mr. Cooper. Should additional violations occur, or if issues are not addressed sufficiently, the company remains subject to further regulatory actions.
The nationwide settlement agreement and consent order may be found at www.csbs.org/2020-settlement-agreement-and-consent-order.
