Nationstar Mortgage's Mr. Cooper to Pay $86 Million in Penalties, Restitution

Dec. 15, 2020

“Mr. Cooper” will be paying homeowners $79.2 million as part of a deal with state attorneys general. If the name doesn’t ring a bell, it’s part of Nationstar Mortgage LLC, the mortgage lender’s servicing arm.

The stage AGs had charged that Mr. Cooper, the nation’s fourth-largest mortgage service, committed numerous errors that caused financial harm to tens of thousands of consumers and resulted in some of them being locked out of their homes.

The agreement provides $79.2 million in restitution to 55,814 borrowers for a variety of harms that were identified in the attorneys general’s six-year investigation. In particular, thousands of borrowers had problems when their loans were transferred to Nationstar, leading to foreclosure in some circumstances.

“Far too often, corporate greed has been a barrier to millions of families trying to attain the American Dream of homeownership,” said New York Attorney General Letitia James. “Our work on this case will directly help thousands of New York homeowners and hold Nationstar mortgages servicer accountable for putting profits over people.” 

The agreement also requires Nationstar to follow a detailed set of rules, or “servicing standards,” in how it handles certain mortgage loans. These servicing standards are more comprehensive than existing federal law and will be in place for three years starting on January 1, 2021.

In particular, the agreement affords greater protection to borrowers with limited English proficiency, including using state and federal government Spanish language mortgage-related forms, capturing and tracking borrowers’ language preferences, and communicating with borrowers who are engaged in loss mitigation in the language of their loss mitigation application.  

In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest non-bank servicer. As loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks, the lawsuit alleged. Borrowers in this category will receive a guaranteed minimum payment of $840 as part of the agreement.

The lawsuit alleged that other borrowers suffered damages when Nationstar failed to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks on their homes. These borrowers will receive a guaranteed minimum payment of $250.

A settlement administrator will send a claim form to eligible borrowers in 2021. Nationstar has already provided some of the relief outlined in the agreement.