December 7, 2020
Case settles allegations of past violations affecting thousands of ‘Mr.
Carson City, NV – Today, Attorney
General Aaron D. Ford joined with 50 attorneys general and other federal and
state agencies to reach an $86.3 million settlement with Nationstar Mortgage.
Nationstar is the country’s fourth-largest mortgage servicer.
consent judgment resolves allegations that Nationstar, which does business as
“Mr. Cooper,” violated consumer protection laws during its servicing of
mortgage loans. The settlement provides restitution 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 some
your attorney general, I strive to protect consumers and homeowners in Nevada,”
said AG Ford. “Borrowers who are current homeowners and those looking to
become homeowners should not have to worry about questionable loan servicing
practices, and today’s settlement demonstrates that we will hold loan servicing
companies who would harm Nevadans accountable.”
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.
consent judgment, filed in the U.S. District Court for the District of
Columbia, provides approximately $79.2 million in relief affecting 55,814 loans
nationally. It covers conduct by Nationstar between January 1, 2011 and December
Nevada, the settlement affects 941 loans for a total of $1,233,963.41 in
Consent Judgment also requires Nationstar 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 January 1, 2021.
settlement was signed by attorneys general from all 50 states and the District
of Columbia. The state attorneys general negotiated the settlement with the state
mortgage regulators and the federal Consumer Financial Protection Bureau, which
filed separate settlement documents. The partners also collaborated with the
U.S. Trustee Program, 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
2012, Nationstar began purchasing mortgage servicing portfolios from
competitors and grew quickly into the nation’s largest non-bank servicer. As
loan data was transferred to Nationstar, borrowers who had sought assistance
with payments and loan modifications sometimes fell through the cracks, the
lawsuit alleged. Borrowers in this category will receive a guaranteed minimum
payment of $840 as part of the settlement.
borrowers suffered damages when Nationstar failed to oversee third-party
vendors hired to inspect and maintain properties owned by delinquent borrowers
and improperly changed locks on their homes, the lawsuit alleged. These borrowers
will receive a guaranteed minimum payment of $250. A settlement administrator
will send a claim form to eligible borrowersin 2021. Nationstar has already provided some of the relief
outlined in the settlement.
agreement also requires Nationstar to conduct audits and provide audit results
to a committee of states to ensure compliance with the settlement.
lawsuit alleged other unlawful acts and practices by Nationstar, including:
to properly oversee and implement the transfer of mortgage loans;
to appropriately identify loans with pending loan modification applications
when a loan was being transferred to Nationstar for servicing;
to timely and accurately apply payments made by certain borrowers;
foreclosure and conveying conflicting messages to certain borrowers engaged in
to properly process borrowers’ applications for loan modifications;
to properly review and respond to borrower complaints;
to make timely escrow disbursements, including the failure to timely remit
property tax payments;
to timely terminate borrowers’ private mortgage insurance; and
monthly modified payment amounts on certain loans where the amounts charged for
principal and interest exceed the principal and interest amount contained in
the trial plan agreement.
The Bureau of Consumer Protection represented
the Office of the Nevada Attorney General in this matter.