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$86.3 million multistate settlement with Nationstar Mortgage

FRANKFORT, Ky. — The Kentucky Attorney General announced an $86.3 million multi-state settlement between 51 attorneys general and Nationstar Mortgage LLC (Nationstar) 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. Kentucky will receive $588,802.63.

The consent judgment resolves allegations of consumer protection law violations related to Nationstar’s 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 nation’s 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.