Attorney General Curtis Hill has joined 50 other attorneys general and other state and federal agencies in securing an $86.3 million settlement with Nationstar Mortgage, the fourth-largest mortgage servicer in the country.
The multistate settlement resolves allegations that Nationstar, which does business as “Mr. Cooper,” violated consumer protection laws during its servicing of mortgage loans. Thousands of borrowers had problems when their loans were transferred to Nationstar, which sometimes led to foreclosures.
The consent judgment, filed Monday 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 occurring from Jan. 1, 2011, until Dec. 31, 2017.
About 1,303 loans in Indiana were affected, for a total amount of approximately $1.26 million.
“Hoosier borrowers suffered as Nationstar swallowed up other mortgage-servicing companies in an attempt to enlarge its own business,” Attorney General Hill said. “We hope the Hoosiers impacted by Nationstar’s conduct will take action when the time comes to recoup some of the money they may have lost.”
In 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.
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.
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.
In addition to monetary relief, the settlement requires Nationstar to follow a detailed set of “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 Jan. 1, 2021.
Finally, the settlement requires Nationstar to conduct audits and provide audit results to a committee of states to ensure compliance with the settlement.
Court documents related to the settlement are attached. Attorney General Hill and the other attorneys general negotiated this settlement with state mortgage regulators and the federal Consumer Financial Protection Bureau (CFPB), which filed separate settlement documents.
The U.S. Trustee Program (USTP), a component within the U.S. Department of Justice that seeks to promote the efficiency and protect the integrity of the bankruptcy system, also collaborated with the attorneys general and the CFPB on this settlement. The USTP is finalizing a separate agreement with Nationstar to address historical servicing issues impacting borrowers in bankruptcy