The Consumer Financial Protection Bureau has announced it has filed a complaint and proposed stipulated judgment and order against Nationstar Mortgage, LLC, which does business as Mr. Cooper. The Bureau’s action is part of a coordinated effort between the Bureau, a multistate group of state attorneys general, and state bank regulators.
Nationstar is one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the United States. The Bureau alleges that Nationstar violated multiple federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners. 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, violated the Real Estate Settlement Procedures Act, and violated the Homeowner’s Protection Act of 1998. Specifically, the Bureau alleges that between January 2012 and January 1, 2016, in numerous instances 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
- misrepresented to borrowers when they would be eligible to have their private mortgage insurance premiums canceled
- failed to timely remove private mortgage insurance from borrowers’ accounts
- failed to timely disburse borrowers’ tax payments from their escrow accounts
- failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings
The proposed judgment and order, if entered by the court, 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 have also settled with Nationstar today and their settlements are reflected in separate actions, concurrently filed in the United States District Court for the District of Columbia.
The Bureau’s and states’ proposed judgments and orders, if entered by the court, will yield nearly $85 million in recoveries for consumers to date and over $6 million more in fees and penalties. They are also part of a larger government effort, which also includes assistance from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the United States Trustee Program, to address Nationstar’s alleged unlawful mortgage loan servicing practices.