Attorney General Doug Chin of Hawaiʻi joined 48 other state attorneys general and over 45 state mortgage regulators in reaching a $45 million settlement with New Jersey-based mortgage lender and servicer PHH Mortgage Corporation.
The settlement resolves allegations that PHH, the nation’s ninth largest non-bank residential mortgage servicer, improperly serviced mortgage loans over a four year period from Jan. 1, 2009 through Dec. 31, 2012. The settlement does not release PHH from liability for conduct that occurred beginning in 2013.
“This settlement holds PHH accountable for the harms that 67 Hawaiʻi borrowers suffered from improper loan servicing,” said Attorney General Chin. “The agreement places new servicing standards upon PHH and provides financial relief to aggrieved homeowners.”
The agreement requires PHH to adhere to comprehensive mortgage servicing standards, conduct audits, and provide audit results to a committee of states.
Borrowers who were subjected to PHH foreclosures during the eligible period will qualify for a minimum $840 payment, and borrowers who faced foreclosures that PHH initiated during the eligible period, but did not lose their home, will receive a minimum $285 payment.
Approximately 67 Hawaiʻi borrowers are eligible. A settlement administrator will contact eligible payment recipients at a later date.
These deficiencies were identified during a multi-state examination of the company conducted by Arizona, Georgia, Louisiana, Massachusetts and New York.
· Provides $31 million in cash payments for up to 52,000 borrowers who lost their homes to foreclosure (Hawaii had 19 borrowers) from January 1, 2009 to December 31, 2012, or were in the foreclosure process (Hawaiʻi had 48 borrowers) during that period
· Mandates that PHH submit an administrative penalty of $8.8 million to state regulators
· Establishes a set of servicing standards the company must follow going forward
“This settlement demonstrates a core responsibility of state regulators to protect consumers from bad actors and bad business practices,” said Iris Ikeda, Hawaiʻi Commissioner of Financial Institutions.
“With this settlement, we are making it clear that we will not tolerate mortgage servicers that harm consumers in anyway. As part of this settlement, States are requiring corrective actions so that PHH’s future mortgage servicing activity ensures timely and accurate processing of loan payments.”