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Friday, June 21, 2024 | Back issues
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States Settle With Mortgage Servicer PHH for $45M

Accused of hurting borrowers in the 2008 financial crisis, PHH Mortgage reached a $45 million federal settlement Wednesday with 49 states and the District of Columbia.

WASHINGTON (CN) - Accused of hurting borrowers in the 2008 financial crisis, PHH Mortgage reached a $45 million federal settlement Wednesday with 49 states and the District of Columbia.

Based in Mount Laurel, New Jersey, PHH made no admission of liability or wrongdoing in signing the deal. The settlement was filed simultaneously in Washington with a federal complaint that accused PHH of engaged in unfair and deceptive consumer practices.

PHH ranks as the nation’s ninth largest non-bank residential mortgage servicer. The complaint against it alleged violations of the Consumer Financial Protection Act of 2010, saying PHH improperly serviced mortgage loans between Jan. 1, 2009, and Dec. 31, 2012.

Delaware Attorney General Matt Denn accused PHH of “failing to properly apply or amortize payments, charging authorized fees for defaults, failing to maintain complete loan files, robosigning affidavits used in foreclosures, referring matters to foreclosure improperly, losing or failing to timely process loss mitigation applications and paperwork, and other actions.”

As part of the settlement, PHH will follow comprehensive mortgage-servicing standards and apprise a committee of states with the results of regular audits.

PHH said these new standards require few changes from how the company operates today. “We have made and will continue to make the necessary enhancements in our operations to ensure we remain compliant and continue to serve our customers in a fair and appropriate manner,” PHH said in a statement.

The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

“We have agreed to resolve concerns raised by the MMC arising from its servicing examination conducted in 2010 and believe that settling this matter is in the best interest of PHH and its constituents,” PHH said in a statement.

The settlement will pay $30.4 million to borrowers and additional payments to states and mortgage regulators for costs related to the lawsuit.

“We have zero tolerance for the types of practices that helped create the crisis – and will hold mortgage companies to account,” New York Attorney General Eric Schneiderman said in a statement. “This settlement requires new mortgage servicing standards and ensures financial relief for homeowners harmed by PHH’s practices.”

New Jersey Attorney General Christopher Porrino added in his statement: “The agreement requires new servicing standards to help ensure that PHH doesn’t repeat the kind of conduct that led to its questionable mortgage practices, and to provide financial relief to aggrieved homeowners.”

Washington state official Charles Clark chimed in as well.

“Washington will not allow residential mortgage servicers to harm consumers by failing to properly service mortgage accounts,” Clark said in a statement. “The newly established servicing practices should ensure that in the future PHH will timely and accurately process loan payments.”

Back in August, PHH also reached a $74 million settlement with the U.S. government under the False Claims Act, resolving claims inspired by a whistleblower action in New York.

Categories / Consumers, Government

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