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PHH Mortgage Settles Lawsuit with States for $45 Million

On January 9, 2018 by Schnader in Finance

By Emily P. Daly

PHH Mortgage Corporation, the ninth largest residential mortgage servicing company in the country, agreed Wednesday to pay over $45 million to settle claims brought against it by the Attorneys General of 49 states and the District of Columbia. Consent Judgment ¶ 4.

The coalition of Attorneys General filed a complaint against PHH Mortgage in the United States District Court for the District of Columbia on January 3, 2018, alleging that PHH Mortgage violated the Unfair and Deceptive Acts and Practices laws of the respective states and the Consumer Financial Protection Act of 2010 for conduct occurring between January 1, 2009 and December 31, 2012.  Compl. ¶¶ 17, 19, 22, 25, 27.

According to the complaint, PHH Mortgage, as a servicer of residential mortgage loans, “regularly reviews mortgage loans for potential loss mitigation or loan modification options, and conducts or manages foreclosures.”  Compl. ¶ 16.  The Complaint alleges that PHH charged unauthorized fees, used incomplete information in the foreclosure process, and failed to apply payments made by borrowers. Compl. ¶ 17

The $45 million monetary settlement will be distributed among borrowers, the Attorneys General, and the states as an administrative penalty. Consent Judgment ¶ 5.  Over $31 million of the settlement amount will go to “(a) borrowers whose loans were serviced by PHH at the time the foreclosure was completed and whose homes were sold or taken in foreclosure between and including January 1, 2009, and December 31, 2012, or (b) all other borrowers whose loans were serviced by PHH and referred to foreclosure during that same time period and not accounted for in (a) above.”  Consent Judgment ¶ 6.

In addition to the monetary settlement, PHH Mortgage is required to adopt new servicing standards, which are attached as Exhibit A to the Consent Judgment.  Consent Judgment ¶ 9.  PHH issued a press release in response to the settlement and stated that the new servicing standards are “largely PHH’s servicing standards today.”

Category: Finance