Massachusetts Part of Multi-State $86.3 Million Settlement with Mortgage Servicer Nationstar

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the following is a press release from the Massachusetts Attorney General’s office submitted to SOURCE media.

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BOSTON – Massachusetts Attorney General Maura Healey has joined a $86.3 million multistate settlement with national mortgage servicer Nationstar Mortgage LLC and 50 attorneys general and other federal and state agencies that will provide nearly $2 million of dollars in relief to more than one thousand Massachusetts residents. 

AG Healey has already secured almost $15 million for Massachusetts homeowners in a separate 2018 settlement with the company over its failure to help homeowners avoid foreclosure.

Today’s consent judgment resolves allegations that Nationstar, which is the country’s fourth-largest mortgage servicer and 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 across the country had problems when their loans were transferred to Nationstar, leading to foreclosure in some circumstances. 

“Nationstar turned its back on families who were trying to stay in their homes and were desperate for help,” said Healey. “This settlement, reached with our colleagues across the country, secures relief for homeowners in addition to the nearly $15 million our office has already obtained from this company. We will continue to monitor this industry to ensure that all mortgage servicers respect the rights of homeowners under our laws.”

Today’s 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.

In Massachusetts, the settlement provides $1,953,627 in relief, affecting 1,015 loans across the state. The settlement covers conduct by Nationstar occurring from Jan. 1, 2011, until Dec. 31, 2017.

In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest non-bank servicer. The lawsuit, which was filed along with the consent judgement today, alleges that as loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks. Borrowers in this category will receive a guaranteed minimum payment of $840 as part of the settlement.

Other 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.

Today’s settlement 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 Jan. 1, 2021. The agreement requires Nationstar to conduct audits and provide audit results to a committee of states to ensure compliance with the settlement.

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 (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.

A settlement administrator will send a claim form to eligible borrowersin 2021. Nationstar has already provided some of the relief outlined in the settlement.Consumers with questions or concerns about deceptive or abusive foreclosure and loan servicing practices can call the Attorney General’s consumer hotline at 617-727-8400 or file a complaint with the office.

In 2018, AG Healey settled a state lawsuit with Nationstar that resulted in direct payments and loan modifications to hundreds of homeowners in Massachusetts. Under the terms of the settlement, Nationstar was required to implement a loan modification program to provide millions in borrower relief in the form of principal reductions, pay $500,000 in restitution to certain foreclosed-upon borrowers, and provide the loan modification review protections required by state law for borrowers who fall into default in the future. Under this settlement, to date, there has been $13,828,918 in principal reductions for affected residents, with an additional $562,901 in principal reductions pending.  

The AG’s Office has been a national leader in securing restitution and other relief for borrowers from banks and servicers. The office has obtained recoveries and other relief from Morgan Stanley, Goldman Sachs, Royal Bank of Scotland, Citigroup, JPMorgan Chase, Countrywide, Fremont Investment & Loan, Option One, HSBC, Ditech, PHH, Shellpoint, Caliber, Bayview, and others on behalf of Massachusetts homeowners.

This matter was handled by Assistant Attorneys General Lisa Dyen and Michael Lecaroz and Division Chief Max Weinstein, with assistance from Paralegals David Birch and Keren Yi, all of AG Healey’s Consumer Protection Division.

editor

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