Attorney General Phil Weiser announces Colorado borrowers receive nearly $1.5 million in multistate settlement with mortgage servicer Nationstar
Dec. 7, 2020 (DENVER, Colo.)—Attorney General Phil Weiser today announced that he has reached a multistate settlement with Nationstar Mortgage, which does business as “Mr. Cooper,” providing nearly $1.5 million in restitution to Colorado borrowers, affecting 917 loans.
This settlement, which includes all 50 states and the District of Columbia, resolves allegations that Nationstar, currently the country’s fourth-largest mortgage servicer, violated consumer protection laws during its servicing of mortgage loans. It also provides approximately $79.2 million in relief affecting 55,814 loans nationally, covering conduct by Nationstar occurring from Jan. 1, 2011, until Dec. 31, 2017.
“Nationstar’s failure to properly service Coloradans’ mortgage loans negatively impacted many lives,” said Weiser. “Through this settlement, we secured relief for Colorado victims of Nationstar’s improper servicing practices and ensured that Nationstar will be held accountable for its actions now and in the future. It is notable that this settlement resulted from significant collaborative problem solving by state and federal enforcers to protect consumers.”
In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into one of the nation’s largest non-bank servicers. As loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes did not receive that assistance, the lawsuit alleged. Borrowers in this category will receive a guaranteed minimum payment of $840 as part of the settlement.
The lawsuit also alleged that some borrowers suffered damages when Nationstar failed to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks on their homes. These borrowers will receive a guaranteed minimum payment of $250.
The settlement also requires Nationstar to follow a detailed set of rules or “servicing standards” in how it handles certain mortgage loans. These servicing standards are more comprehensive than existing law and will be in place for three years starting on Jan. 1, 2021. The agreement requires Nationstar to conduct audits and provide audit results to a committee of states to ensure compliance.
A settlement administrator will send a claim form to eligible borrowers in 2021. Nationstar has already provided some of the relief outlined in the settlement.
Today’s announcement reflects the success of collaborative efforts among state and federal law enforcement and regulatory partners. The state attorneys general negotiated the settlement with the state mortgage regulators and the federal Consumer Financial Protection Bureau, which filed separate settlement documents. Additionally, the United States Trustee Program within the U.S. Department of Justice is finalizing a separate agreement with Nationstar to address historical servicing issues impacting borrowers in bankruptcy.