PHH Mortgage Corp. has agreed to settle allegations that it misled distressed borrowers about the options available to them.
The agreement with New Jersey’s Office of Attorney General will cost the Mount Laurel, N.J.-based mortgage servicer $6.25 million.
An investigation was initiated by the state in 2011 as a result of complaints that were made by borrowers.
“The state’s investigation raised a number of concerns about potential violations of the New Jersey Consumer Fraud Act including: inaccurate statements about the time it would take to process loan modification requests; inaccurate statements to consumers about foreclosure proceedings and assessments of improper late fees and other fees,” an announcement from the Office of the Attorney General stated.
Around 2,000 borrowers across the county will receive $3.61 million. The total includes 44 borrowers whose loans were sold at sheriff’s sale and will receive $10,000 each.
PHH has 30 days to make payments to consumers.
The remaining $2.64 million will be paid to New Jersey.
PHH will also adopt national servicing standards outlined in a consent judgment filed with the State of New Jersey Department of Law & Public Safety, Division of Consumer Affairs.
The order requires PHH to report quarterly to the state detailed information about loan modifications, foreclosure actions and resolution of borrowers calls to its loss mitigation department. The requirement will continue for two years.
PHH, which cooperated in the state investigation, did not admit any wrongdoing or liability.
In Mortgage Daily’s third-quarter servicer ranking, PHH was the eight-largest servicer with a servicing portfolio of $228 billion.
