Attorney General Enters Multistate Mortgage Servicing Settlement

Jan 3 • 304 Views • View Comments

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Attorney General Pam Bondi, 48 other state attorneys general, the District of Columbia, and more than 45 state mortgage regulators, today announced a $45 million settlement reached with PHH Mortgage Corporation, a New Jersey based mortgage lender and servicer. This is the ninth mortgage servicing settlement reached by Attorney General Bondi since 2012. The settlement resolves allegations of PHH’s servicing misconduct during the housing crisis when PHH was one of the larger non-depository mortgage servicers.

This settlement follows national settlements with the mortgage servicing entities of Bank of America, Chase, Citi, Wells, GMAC/Ally, Ocwen, HSBC and Suntrust. To date, from the previous eight settlements, Floridians received more than $139.5 million in cash payments, more than $10.2 billion in other relief such as mortgage forgiveness and $334 million in penalties to Florida. The PHH settlement is estimated to bring potentially $2.8 million in additional cash payments to Floridians.

According to the complaint filed by the state attorneys general, PHH threatened foreclosure and conveyed conflicting messages to certain borrowers engaged in loss mitigation. PHH also allegedly charged unauthorized fees for default-related services. Specifically, the complaint alleges that PHH, among other things, failed to:

  • Maintain adequate documentation to determine whether PHH had standing to foreclose;
  • Appropriately respond to certain borrowers’ complaints and reasonable requests for information and assistance;
  • Timely and accurately apply payments made by certain borrowers;
  • Properly oversee third party vendors retained for servicing and foreclosure operations;
  • Preserve accurate account statements; and
  • Adequately process borrowers’ applications for loan modifications.

As part of the settlement, PHH agrees to adopt new servicing standards revised from the National Mortgage Settlement and provide monetary relief. PHH will pay more than $30 million nationally for payments to borrowers who lost their homes to foreclosure or were referred for foreclosure between 2009 and 2012. PHH borrowers who lost their homes to foreclosure during the eligible period will qualify for a minimum $840 payment, and borrowers who faced foreclosures that PHH initiated during the eligible period, but did not lose their home, will receive a minimum $285 payment. Approximately 5,400 Florida borrowers will be eligible for a payment from this fund. A settlement administrator will contact eligible payment recipients at a later date.

Florida borrowers comprise more than 10 percent of the national population of eligible PHH borrowers. The borrower payment amount is dependent on how many borrowers file claims.

The $45 million total PHH settlement includes the $30.4 million in payments to borrowers, $1 million for claims administration, an additional $5 million to the lead states who headed up the investigation and negotiations, including $390,000 to Florida, and a separate $8.8 million payment to state mortgage regulators.

To view a copy of the consent judgment, click here.

 

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