The lender overcharged borrowers and failed to investigate consumer complaints, authorities say
Nationstar Mortgage has reached a settlement with the California Department of Business Oversight (DBO) to pay over $9.2 million in refunds and penalties for overcharging borrowers and failing to properly investigate consumer complaints.
The Texas-based mortgage lender and servicer is currently doing business in California as “Mr. Cooper.” According to figures from the DBO, the settlement includes more than $4 million that Nationstar already has already refunded to 48,000 borrowers for per-diem interest and recording fees.
An additional 1,637 borrowers will receive refunds of $120 plus interest for an origination fee the DBO determined to be unlawful. The combined refunds total more than $4.2 million.
“You don’t get to take advantage of consumers in California,” said DBO Commissioner Jan Lynn Owen. “With this settlement, the DBO has secured millions in refunds for borrowers, penalties to discourage future violations, and ongoing independent audits to monitor Nationstar’s compliance with California law.”
The watchdog said the settlement resolves violations discovered in two regulatory examinations of loan originations and other activities dating back to 2009. Under California law, lenders are not allowed to start charging interest on mortgage loans prior to the business day before the loan proceeds are disbursed, and may not charge fees that exceed actual recording costs. They are also prohibited from accepting referral fees from third-party settlement service providers. DBO said Nationstar violated these statutes.
The state’s law also requires mortgage servicers to conduct a reasonable investigation in response to borrower complaints alleging servicing errors. The DBO found that Nationstar lacked appropriate policies and procedures to conduct a reasonable investigation of complaints involving errors that arose with a prior servicer.
In addition to the refunds, Nationstar will pay $4.8 million in penalties for past violations – $250 for each additional violation identified by the independent auditor, and $200,000 to cover the costs of the investigation.
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The Texas-based mortgage lender and servicer is currently doing business in California as “Mr. Cooper.” According to figures from the DBO, the settlement includes more than $4 million that Nationstar already has already refunded to 48,000 borrowers for per-diem interest and recording fees.
An additional 1,637 borrowers will receive refunds of $120 plus interest for an origination fee the DBO determined to be unlawful. The combined refunds total more than $4.2 million.
“You don’t get to take advantage of consumers in California,” said DBO Commissioner Jan Lynn Owen. “With this settlement, the DBO has secured millions in refunds for borrowers, penalties to discourage future violations, and ongoing independent audits to monitor Nationstar’s compliance with California law.”
The watchdog said the settlement resolves violations discovered in two regulatory examinations of loan originations and other activities dating back to 2009. Under California law, lenders are not allowed to start charging interest on mortgage loans prior to the business day before the loan proceeds are disbursed, and may not charge fees that exceed actual recording costs. They are also prohibited from accepting referral fees from third-party settlement service providers. DBO said Nationstar violated these statutes.
The state’s law also requires mortgage servicers to conduct a reasonable investigation in response to borrower complaints alleging servicing errors. The DBO found that Nationstar lacked appropriate policies and procedures to conduct a reasonable investigation of complaints involving errors that arose with a prior servicer.
In addition to the refunds, Nationstar will pay $4.8 million in penalties for past violations – $250 for each additional violation identified by the independent auditor, and $200,000 to cover the costs of the investigation.
Related stories:
Wells Fargo axes head of consumer lending
Goldman Sachs makes progress on mortgage-related settlements
