Nationstar Agrees to Pay $90 Million to Settle Claims Over Harming Homeowners After the Great Recession

Major mortgage servicer Nationstar, the fourth-largest mortgage servicer in the U.S., has agreed to pay $91 million to settle claims brought by the Consumer Financial Protection
Bureau and state attorneys general that allege the company had failed to honor mortgage forbearance agreements and unfairly foreclosed on homeowners.

According to the CFPB and 50 state attorneys general, Nationstar, which is now known s Mr. Cooper, had engaged in unlawful practicies in handling mortgages following the Great Recession from January 2012 to December 2016.

The loan servicer allegedly failed to honor borrowers’ loan modification agreements and foreclosed on borrowers with pending forbearance applications after promising not to do so. The company also failed to properly handle escrow payments and accounting for homeowners who were in Chapter 13 bankruptcy proceedings.

Nationstar’s failings resulted in “substantial consumer harm,” said CFPB Director Kathleen Kraninger.

“Mortgage servicers are entrusted with handling significant financial transactions for millions of Americans, including struggling homeowners. Nationstar broke that trust by engaging in unfair and deceptive practices,” Kraninger added.

According to CFPB estimates, 40,000 borrowers were harmed by Nationstar’s allegedly unfair and deceptive practices. The proposed settlement with the CFPB requires Nationstar to pay $73 million in restitution to affected borrowers, as well as a $1.5 million civil penalty to the agency.

When combined with the state settlements, Nationstar will have to pay a total of $91 million overall: $85 million to harmed consumers and $6 million in civil penalties.

Kwame Raoul, attorney general of Illinois has said, “There are going to be a lot of homeowners who need a home loan modification or other assistance. We will be watching the mortgage interest industry to ensure they are treating homeowners fairly and fulfilling their obligations.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.