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A Pathetic Slap on the Wrist: PHH will pay $45 Million over Mortgage Servicing Failures. Those Wrongfully Foreclosed Eligible for $840 Payment

Posted by Neil Garfield | January 3, 2018

By LendingLies Staff

PHH, a loan servicer, will pay $45 million as part of a nationwide settlement over mortgage servicing and foreclosure issues during the housing crisis, a group of 49 state Attorney General’s announced Wednesday.

PHH is required to adopt new servicing standards and provide monetary relief to affected homeowners, though the company claims to have already adopted new standards.

The settlement covers the company's mortgage servicing practices, including foreclosure activities, between Jan. 1, 2009 and Dec. 31, 2012 during the financial crisis.

The settlement, between PHH and the Multi-State Mortgage Committee, includes more than 45 state mortgage regulators, along with 49 state attorneys general, and the District of Columbia(except New Hampshire). It is unknown at this time why New Hampshire is not a party in the settlement.

According to the complaint filed by the state attorneys general, PHH "threatened foreclosure and conveyed conflicting messages to certain borrowers engaged in loss mitigation."

Per the office of Florida Attorney General Pam Bondi, PHH also allegedly charged unauthorized fees for default-related services.

According to Bondi's office, the state AGs complaint alleged that PHH failed to:

  • Maintain adequate documentation to determine whether PHH had standing to foreclose

  • Appropriately respond to certain borrowers' complaints and reasonable requests for information and assistance

  • Timely and accurately apply payments made by certain borrowers

  • Properly oversee third party vendors retained for servicing and foreclosure operations

  • Preserve accurate account statements

  • Adequately process borrowers' applications for loan modifications

PHH will pay more than $30 million to borrowers who lost their homes to foreclosure or were referred for foreclosure during the time period in question.

PHH borrowers whose homes were lost in foreclosure during that period will qualify for a minimum $840 payment, while borrowers who faced foreclosures that PHH initiated, but did not lose their home, will receive a minimum $285 payment.

In total, the $45 million settlement includes $30.4 million in payments to borrowers, $1 million for claims administration, an additional $5 million to the lead states that headed up the investigation and negotiations, and a separate $8.8 million payment to state mortgage regulators.

PHH said that it agreed to the settlement in order to move beyond "legacy" issues, but notes that it did not admit liability.

"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," the company said in a press-release.

"Our decision to resolve this legacy matter under the terms of the settlement agreement and consent orders is not an admission of liability or that we violated any applicable laws, regulations or rules governing the conduct and operation of our servicing business during the relevant time frame," the company continued. "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." Or until the AGs sue them again for the same violations.

In a separate filing with the Securities and Exchange Commission, PHH noted that it expects the portion of the settlement amount representing payments made to borrowers to be tax deductible.

As part of the settlement, PHH will also implement a testing and reporting process to ensure compliance with the servicing standards established by the settlement, for a period of three years.

A separate release from New York Attorney General Eric Schneiderman states that the settlement does not release PHH from liability for conduct that occurred beginning in 2013.

To read the full consent agreement between PHH and the states, click here.

 

 

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