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From Banking and Finance Law Daily, January 3, 2018

PHH Corp. settles state charges over mortgage servicing, foreclosures

By Richard A. Roth, J.D.

New Jersey-based PHH Mortgage Corporation has agreed to pay up to $45 million to settle charges arising from the company’s mortgage servicing and mortgage foreclosure practices between 2009 and 2012. The settlement calls for the payment of more than $30 million to homeowners, some of whom lost their homes in foreclosure, $5 million to 12 state attorneys general whose offices led the investigation and the settlement, and nearly $9 million to state mortgage regulators. The consent judgment covers charges by 49 states and the District of Columbia, and by 45 state mortgage regulatory agencies. New Hampshire is the only state that did not participate.

The complaint the attorneys general will file to complete the settlement alleges a litany of servicing violations by the company. These include that PHH Corp:

  • failed to apply homeowners’ payments properly;
  • charged unauthorized default-related fees;
  • threatened foreclosures and gave conflicting information to homeowners who were in loss mitigation programs;
  • failed to respond to homeowners’ information or aid requests;
  • did not properly handle loss mitigation applications, including not keeping track of documents submitted by homeowners;
  • did not keep complete loan servicing files;
  • commenced foreclosures without having documentation that proved the company had the right to do so;
  • did not adequately supervise third parties it used in the foreclosure process;
  • filed documents with inaccurate or incomplete information; and
  • used "robosigned" documents.

While the company is settling the charges, it has not admitted any wrong doing.

The consent judgment establishes mortgage servicing standards and requires third-party audits. Homeowners who lost their homes to foreclosure will be paid at least $840, while those who faced foreclosures but did not lose their homes will receive at least $285. The consent judgment has a three-year term, and it is not binding on anyone who acquires PHH Corp. or the company’s assets.

Companies: PHH Mortgage Corporation

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