For the second time this year, Nationstar Mortgage LLC has agreed to a settlement with a state located in the Northeast for alleged servicing abuses. Problems with originations were also identified.
This year’s first settlement with the Dallas-based company, which does business as Mr. Cooper, was with
Massachusetts’ attorney general in January.
Nationstar was accused of
providing modifications without considering borrowers’ ability to repay the debt. It also allegedly failed to log, track and process documents for modification reviews.
On Wednesday,
an announcement from the New York Department of Financial Services said it reached a consent order with Nationstar.
According to the department,
the home lender and servicer has failed to develop effective, scalable controls that can keep pace with its rapid growth.
Nationstar’s New York servicing portfolio has grown from roughly 18,000 loans at the end of 2012 to 91,000 by the end of 2015. Nationally, the servicing portfolio has grown from 617,000 loans to 2.1 million loans during the same period.
Examinations by the state found
that Nationstar’s document retention and document management processes were significantly flawed.
“In many instances, servicing files lacked documentation showing the company’s compliance with laws and regulations specifically designed to protect consumers, including loss mitigation correspondence, single point of contact notices, and annual privacy notices,” today’s statement said.
In addition, the examinations found that the company’s controls tied to its information technology systems were under-developed. Nationstar was allegedly unable to provide examiners with formal documentation detailing the nature and scope of IT audit functions outsourced to a third-party vendor.
Other servicing shortcomings include the unauthorized operation of two branches, inadequate documentation retention and failure to maintain a fee schedule on its website. It also allegedly failed to
submit quarterly reports in a timely manner and file multiple 90-day pre-foreclosure notices with the department.
Today’s announcement
also highlighted a lack of required documentation on newly originated loans, 900 delayed loan closings, and a ten-fold increase in state complaints.
The state additionally accuses Nationstar of using multiple unauthorized domain names and inadequate bookkeeping.
As part of its consent order, Nationstar agreed to pay a $5 million fine. The fine is in addition to $7 million in restitution already paid to borrowers in the state.
Nationstar will also donate $5 million in residential real property or first-lien mortgages to one or more non-profit organizations.
In addition, the consent order requires Nationstar to identify an independent, third-party consultant to assess measures taken to address the deficiencies and violations of laws, regulations and industry guidance.
