State to get $589,000 from mortgage company settlement

FRANKFORT, Ky. (WTVQ) – Kentucky will receive $588,802.63 as its share of an $86 million settlement among 51 attorneys general and Nationstar Mortgage for negligent servicing of mortgage loans.

Nationstar, doing business as Mr. Cooper Home Loans, has agreed to pay $86,346,353 to 50 states and the District of Columbia.

“This settlement provides nearly $600,000 in restitution to Kentuckians harmed by Nationstar’s unlawful mortgage servicing practices and requires the non-bank mortgage servicer to comply with strict practices to protect consumers from future loss,” Kentucky Attorney General Daniel Cameron said in announcing the settlement.

The consent judgment resolves allegations of consumer protection law violations related to Nationstars negligent servicing of mortgage loans from January 1, 2011, until December 31, 2017.

The settlement provides restitution for over 55,814 loans nationwide, 574 of which were held by Kentuckians.

In their complaint, the coalition alleged that Nationstar engaged in the following unlawful acts and practices:

  • failing to properly oversee and implement the transfer of mortgage loans;
  • failing to appropriately identify loans with pending loan modification applications when a loan was being transferred to Nationstar for servicing;
  • failing to timely and accurately apply payments made by certain borrowers;
  • threatening foreclosure and conveying conflicting messages to certain borrowers engaged in loss mitigation;
  • failing to properly process borrowers applications for loan modifications;
  • failing to review and respond to borrower complaints properly;
  • failing to make timely escrow disbursements, including the failure to timely remit property tax payments;
  • collecting monthly modified payment amounts on certain loans where the amounts charged for principal and interest exceed the principal and interest amount contained in the trial plan agreement;
  • failing to properly maintain escrow accounts, including collecting escrow shortages from borrowers on a completed Chapter 13 bankruptcy plan that were not legally due; and
  • failing to identify and communicate with successors in interest.
  • failing to timely terminate borrowers private mortgage insurance;

In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and quickly grew to become the nations largest non-bank mortgage servicer. As loan data was transferred to Nationstar, some borrowers who had sought assistance with payments and loan modifications fell through the cracks. The settlement guarantees a minimum payment of $840 to loan holders in this category.

Other borrowers suffered damages when Nationstar failed to properly oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks. Under the settlement, these borrowers will receive a minimum payment of $250.

In addition to these payments, Nationstar has agreed to follow a comprehensive set of servicing standards for handling certain mortgage loans, to conduct audits, and to provide audit results to a committee of attorneys general, ensuring compliance with the settlement.

Nationstar has already provided some financial relief outlined in the settlement, and a settlement administrator will send claim forms in 2021 to the remaining eligible borrowers.

The coalition of attorneys general negotiated the settlement with state mortgage regulators and the federal Consumer Financial Protection Bureau, which filed separate settlements. The coalition also collaborated with the U.S. Trustee Program (USTP) within the Department of Justice. The USTP is finalizing a separate agreement with Nationstar to address historical servicing issues affecting borrowers in bankruptcy.

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