Nationstar Mortgage, LLC d/b/a Mr. Cooper
Documents in this case
- Complaint · · 21 p.
- Stipulation · · 24 p.
Case summary
On December 7, 2020, the Consumer Financial Protection Bureau (Bureau) filed a complaint and proposed stipulated judgment and order against Nationstar Mortgage, LLC, which does business as Mr. Cooper (Nationstar). The Bureau alleges that Nationstar violated multiple Federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners. Nationstar is one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the United States. The proposed judgment and order, which the court entered on December 8, 2020, requires Nationstar to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It also requires Nationstar to pay a $1.5 million civil penalty to the Bureau. Attorneys general from all 50 states and the District of Columbia and bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia settled with Nationstar the same day and their settlements are reflected in separate actions, concurrently filed in the United States District Court for the District of Columbia. The orders in the Bureau’s and the States’ actions have yielded nearly $85 million in recoveries for consumers to date and over $6 million more in fees and penalties. They are also part of a larger government effort, which also includes assistance from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the United States Trustee Program, to address Nationstar’s alleged unlawful mortgage loan servicing practices.
Complaint ()
PDF of this document (21 pages)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
BUREAU OF CONSUMER FINANCIAL PROTECTION, 1700 G Street, NW Washington, DC 20552
Plaintiff,
v.
NATIONSTAR MORTGAGE LLC, d/b/a MR. COOPER, 8950 Cypress Waters Boulevard Coppell, TX 75019
Defendant.
Case No. 1:20-cv-3550
COMPLAINT FOR A PERMANENT INJUNCTION AND OTHER RELIEF
1.
The Bureau of Consumer Financial Protection (“Bureau”) brings this action against Nationstar Mortgage LLC, d/b/a Mr. Cooper (“Nationstar” or “Defendant”) under Sections 1054 and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5564 and 5565. Nationstar is one of the largest mortgage servicers, and the largest non-bank mortgage servicer, in the United States. Nationstar violated multiple federal consumer financial laws, causing substantial harm to the borrowers whose loans it serviced. Between January 1, 2012 and December 31, 2015, Nationstar: (1) failed to identify thousands of loans with existing in-flight modifications and, as a result, failed to recognize some transferred loans with pending loss mitigation applications or trial modification plans, or failed to identify and honor other borrowers’ loan modification agreements; (2) foreclosed on borrowers to whom it had promised foreclosure holds while they applied for loss mitigation relief; (3) improperly increased borrowers’ permanent, modified monthly loan payments; (4) failed to timely disburse borrowers’ Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 1 of 21
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tax payments from their escrow accounts; (5) failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings; and (6) failed to timely remove private mortgage insurance from borrowers’ accounts. Each of these acts or failures violated the law.
2.
The Bureau brings this action against Defendant under: (1) Sections 1031 and 1036 of the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. §§ 5531, 5536; (2) Sections 6 and 19 of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2605, 2617, and the regulations promulgated thereunder at Regulation X, 12 C.F.R. § 1024 et seq. (“RESPA Mortgage Servicing Rule”); and (3) Sections 4902(a) and (b) of the Homeowners Protection Act of 1998, 12 U.S.C. §§ 4902(a) and 4902(b) (“HPA”). 3.
The Bureau brings this action to obtain injunctive relief and other equitable relief to address and remedy Defendant’s unlawful conduct; to require Defendant to pay redress to injured borrowers; and to impose civil money penalties against Defendant. JURISDICTION AND VENUE 4.
The Court has subject-matter jurisdiction over this action because it is brought under federal consumer financial law, 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345. 5.
Venue is proper in this district under 28 U.S.C. § 1391(b) and 12 U.S.C. § 5564(f) because Defendant conducts business in this district, and part of the events giving rise to the claims occurred in this district.
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PLAINTIFF 6.
The Bureau is an independent agency of the United States created by the CFPA. 12 U.S.C. § 5491(a). The Bureau is charged with enforcing federal consumer financial laws. 12 U.S.C. §§ 5563, 5564.
7.
The CFPA is a federal consumer financial law. 12 U.S.C. § 5481(14). Under Sections 1031 and 1036 of the CFPA, it is unlawful for any covered person to commit or engage in any unfair, deceptive, or abusive acts or practices. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). 8.
RESPA and the HPA are federal consumer financial laws. 12 U.S.C. § 5481(12), (14). Under Section 1036 of the CFPA, it is unlawful for any covered person “to offer or provide to a consumer any financial product or service not in conformity with federal consumer financial law, or otherwise commit any act or omission in violation of a federal consumer financial law.” 12 U.S.C 5536(a)(1)(A). Violations of RESPA and the HPA are therefore violations of the CFPA. Id.
9.
The Bureau is authorized to commence civil actions in federal district court in its own name to address violations of federal consumer financial laws, including violations of the CFPA. 12 U.S.C. § 5564(a), (b).
DEFENDANT 10.
Nationstar is a Delaware limited liability company with its principal place of business in Coppell, Texas. Mr. Cooper is the current name under which Nationstar does business. Nationstar engages in mortgage servicing by, among other things, processing borrower payments, administering loss mitigation processes, and managing foreclosures. At all times Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 3 of 21
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relevant to this complaint, Nationstar has done business in this District and throughout the United States.
11.
Defendant is a “covered person” pursuant to 12 U.S.C. § 5481(6) because it offers and provides consumer financial services, which includes “extending credit and servicing loans” and “collecting debt” related to such loans, as defined under the CFPA, 12 U.S.C. § 5481(15)(A)(i) and (x).
12.
For the purpose of RESPA, a servicer is a person “responsible for servicing of a loan.” 12 U.S.C. § 2605(i)(2). Under RESPA, “servicing” means “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan…and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3). 13.
Defendant is subject to RESPA as a mortgage servicer of federally related mortgage loans.
FACTUAL ALLEGATIONS Company Background 14.
Defendant is the largest non-bank mortgage servicer in the United States and the third largest mortgage servicer overall.
15.
Defendant has grown aggressively over the last decade, principally by acquiring mortgage servicing rights in large-scale, or bulk, transfers. In 2011, Defendant serviced approximately 600,000 residential loans, but by 2014 that number had grown to almost two million loans.
16.
Defendant currently services the loans of over three million borrowers, with the unpaid principal balance of those loans totaling approximately $500 billion. Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 4 of 21
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Defendant Failed to Identify and Honor Transferred Loan Modification Agreements
17.
Since at least January 2012, Defendant has acquired mortgage servicing rights for many loans that were subject to trial modification agreements entered into by the borrower and the prior servicer.
18.
These existing modification agreements required borrowers to make trial payments and meet other contractual requirements. If the borrowers did so, their servicer was required to permanently modify their loans within 30 days of their successful performance under the trial modification agreements.
19.
Defendant acquired servicing rights to many loans subject to trial modification agreements where the trial period had begun but had not yet ended, or where the loan had not yet been permanently modified. Defendant frequently failed to identify loans that had been transferred from previous servicers with such pending loan modifications (“in-flight modifications”) prior to servicing the loans.
20.
Because Defendant failed to identify in-flight modifications, it wrongfully denied some borrowers loan modifications or made permanent modifications to borrowers’ loans only after significant delays beyond the period provided for in the trial modification agreements. 21.
In 2013, the Bureau required Defendant to review loans to which it acquired servicing rights between January 2012 and November 2013. Defendant’s review identified a substantial number of loans with pending trial loan modifications that Defendant did not timely convert to permanent status within the required 30-day window after the borrower’s successful completion of their trial plan. The Bureau also required Defendant to conduct a follow-up review in 2015, which again identified a substantial number of such instances of delay among loans transferred between November 2013 and March 2015.
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Defendant Foreclosed on Borrowers Unlawfully 22.
In or around January 2014, Defendant foreclosed upon borrowers who had applied for loan modifications after sending the borrowers letters promising it would not foreclose while the borrowers’ applications were under review, or before any applicable appeal had concluded.
23.
Contrary to Defendant’s explicit written promises, it initiated foreclosures and even sold borrowers’ homes while the borrowers’ loss mitigation applications or appeals were pending. In at least one case, the borrower had already accepted and begun performing on the modified mortgage before being wrongfully foreclosed upon. 24.
Defendant’s initiation and completion of foreclosure proceedings in 2014 for borrowers to whom it promised foreclosure holds caused significant harm to impacted borrowers. These borrowers suffered significant negative impacts, including to their finances and credit.
Defendant Impermissibly Increased Borrowers’ Permanent Modified Monthly Payments 25.
Defendant modified mortgages for some borrowers in financial distress under loss mitigation programs administered by the federal government, government-sponsored enterprises, or under proprietary loss mitigation programs.
26.
Before a borrower’s mortgage could be permanently modified under such a program, the borrower had to meet certain basic requirements and complete a trial period with a modified, reduced monthly mortgage payment. These requirements were intended to determine whether the borrower could manage the new, lower monthly payment on a permanent basis. Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 6 of 21
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27.
Defendant told some borrowers who applied for a modification that their trial monthly payments would be based on a percentage of the borrower’s monthly gross income and that the payment required by a permanent modification would be based on the same percentage. 28.
Defendant sent notices to borrowers that informed these borrowers that “[their] modified payment may change if [their] property taxes or insurance premiums change,” but that any such a change “should not significantly change the amount of [the borrower’s] modified mortgage payment.”
29.
These modification programs generally prohibited increases to a borrower’s monthly trial payment, but permitted certain increases, for example those caused by changes to the borrower’s taxes or insurance costs.
30.
These programs also generally prohibited “re-underwriting” a borrower’s modification once the monthly payment amount has been determined for the purpose of a trial modification offer. For example, the federal government’s Making Home Affordable guidelines required servicers offering its Home Affordable Modification Program (“HAMP”) option to complete all underwriting to determine the modified monthly payment before the trial period plan notice is sent to borrowers.
31.
Borrowers who met the requirements of a trial period plan, including making all payments on time, were entitled to a permanent mortgage modification based on the terms of the trial modification offer, which they accepted by meeting its obligations. 32.
From 2013 through 2015, Defendant impermissibly increased the permanent monthly payments for some borrowers after those borrowers had successfully completed trial period plan payments and complied with the other applicable requirements to receive a permanent modification.
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33.
In numerous instances, errors in Defendant’s systems of record that were first identified in September 2014 contributed to these increases. 34.
Some borrowers for whom Defendant increased monthly payments suffered from payment shock or defaulted upon their modified loans as a result of the unilateral and unanticipated increases to their monthly mortgage payments. In the absence of changes to their taxes or insurance, borrowers had no reason to anticipate that Defendant would significantly increase their payments after they had successfully completed their trial plans. 35.
Borrowers who could not manage the unexpected increased monthly payments imposed by the Defendant were sometimes forced to seek more drastic options to avoid foreclosure, such as deeds in lieu of foreclosure or short sales. When even those alternatives were not viable options, Defendant foreclosed on some affected borrowers. 36.
In numerous instances Defendant foreclosed on borrowers whose permanent modification payments were impermissibly increased between 2013 and 2015. Others avoided foreclosure by submitting deeds in lieu of foreclosure or executing short sales. Defendant Mishandled Borrowers’ Escrow Accounts 37.
Defendant failed to disburse borrowers’ tax payments in a timely manner. Defendant also failed to timely analyze escrow accounts for borrowers who filed for bankruptcy. Untimely Disbursements 38.
When maintaining a borrower’s escrow account for the payment of taxes and homeowner’s insurance, mortgage servicers are required annually to: (1) estimate the amount of taxes and insurance premiums a borrower will need to pay for the upcoming year; (2) calculate the borrower’s monthly escrow payment based on the borrower’s estimated taxes and insurance; Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 8 of 21
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and (3) disburse tax payments and homeowner’s insurance premiums to local taxing authorities and insurance companies throughout the year as appropriate. 39.
In many instances, between January 1, 2012 and March 15, 2015, Defendant failed to disburse tax payments from borrowers’ escrow accounts in a timely manner as required by law.
40.
As a result, some borrowers were forced to pay unnecessary penalties, which accrued because of Defendant’s late payment of borrowers’ property taxes. Annual Escrow Analysis 41.
Defendant is required by federal law to perform annual escrow account analyses on all loans for which it manages an escrow account. 42.
When performing an escrow analysis, Defendant must estimate a borrower’s future homeowner’s insurance premium and tax obligations, then calculate the monthly amounts the borrower should be charged to ensure the escrow account has sufficient funds to make required tax and insurance payments for the year. 43.
Servicers must also accurately compute the borrower’s monthly payment obligation to determine whether any surplus, shortage, or deficiency exists in the escrow account. 44.
Under most circumstances, mortgage servicers are required to provide an annual escrow statement to borrowers each year. Mortgage servicers are not, however, required to provide an annual escrow statement to borrowers with escrow accounts while those borrowers are in bankruptcy.
45.
This exception only relieves the mortgage servicer from providing the borrower the results of the annual escrow analysis in an escrow statement; the servicer’s obligation to perform the escrow analysis remains. This analysis enables the servicer to understand if and how Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 9 of 21
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a borrower’s tax and insurance obligations have changed during the pendency of a borrower’s bankruptcy, which may create a surplus, shortage, or deficiency in the escrow account. 46.
Prior to March 2016, Defendant did not perform annual escrow analyses during the pendency of borrowers’ active bankruptcies. As a result, Defendant collected monthly escrow amounts from borrowers that in many instances were too low after the borrowers’ insurance premiums or taxes changed during their bankruptcy proceedings. 47.
As a result of Defendant’s failure to analyze borrowers’ accounts, many borrowers had a deficiency or shortage accrue in their accounts, including borrowers who made all of their mortgage payments pursuant to a court-approved plan under Chapter 13 of the U.S. Bankruptcy Code.
48.
On numerous occasions, after the borrower was discharged, Defendant attempted to collect on these accrued shortages and deficiencies, even though such attempts were impermissible without obtaining the required bankruptcy court approval. 49.
Defendant’s failure to perform the required escrow analyses caused some borrowers to experience large payment shocks when they emerged from bankruptcy and discovered Defendant intended to collect escrow shortages that it had not previously identified, and that the borrowers otherwise had no way of anticipating. 50.
From around January 2011 to around June 2016, Defendant failed to conduct escrow analyses within the required time period for thousands of borrowers who had filed for bankruptcy.
Defendant Mishandled Borrowers’ Private Mortgage Insurance 51.
Borrowers are generally required to purchase Private Mortgage Insurance (“PMI”) when they obtain a mortgage but have a down payment of less than 20 percent of the Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 10 of 21
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home’s price, or when they refinance their mortgage but have less than 20 percent equity in their property.
52.
Pursuant to the Homeowners Protection Act (“HPA”), servicers are required to remove PMI and cease collecting premium payments from borrowers under certain circumstances, in some instances upon a borrower’s request and in others automatically. Defendant failed to cancel as requested by the borrowers, or automatically terminate PMI, as required under the HPA, for several thousand borrowers. 53.
Pursuant to the HPA, there are two separate circumstances under which servicers must remove PMI:
(1) Automatic Termination. Servicers must automatically terminate a borrower’s PMI on the loan’s predetermined “termination date,” which is the date when the principal balance of the mortgage is first scheduled to reach 78 percent loan-to-value (“LTV”), or, if the borrower is not current as of the termination date, the first day of the first month after the borrower becomes current on the loan; and (2) Borrower-Requested Cancellation. Servicers must cancel a borrower’s PMI upon receipt of borrower’s written request on the loan’s “cancellation date,” which is the date when the LTV is scheduled to reach 80% of the original value of the property, or the date on which the principal balance of the loan reaches 80% of the original value of the property based on actual payments.
54.
Defendant operated under an erroneous reading of the HPA’s cancellation requirements. It required borrowers to reach a 75 percent LTV threshold, rather than the 80 percent the HPA requires, before it would honor a borrower’s request for cancellation of PMI. Because Defendant operated under an erroneous understanding of the HPA, it also provided consumers with incorrect information in response to inquiries regarding their ability to have their PMI canceled.
55.
Defendant conducted a comprehensive review of its PMI procedures between January 1, 2013 and December 31, 2015, which found that in numerous instances Defendant Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 11 of 21
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failed to accurately determine borrowers’ termination dates, and as a result, Defendant failed to automatically terminate PMI on time for these borrowers. 56.
In failing to cancel and terminate PMI in compliance with the HPA, Defendant also continued to collect, and failed to return, PMI payments notwithstanding the HPA’s requirements that it do so.
VIOLATIONS OF THE CFPA 57.
Sections 1031 and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531 and 5536(a)(1)(B), prohibit covered persons from engaging “in any unfair, deceptive, or abusive act or practice.”
Count I (Unfair Practices Related to In-Flight Modifications) 58.
An act or practice is unfair under the CFPA if “the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers” and “such substantial injury is not outweighed by countervailing benefits to consumers or to competition.” 12 U.S.C. § 5531(c).
59.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 60.
Defendant failed to identify loans with existing in-flight modifications and, as a result, failed to honor borrowers’ loan modification agreements. 61.
In numerous instances, Defendant’s actions caused or were likely to cause substantial injury to borrowers. These borrowers were negatively impacted by Defendant’s transfer-process failures, which, among other things, caused significant delays in converting trial modifications to permanent ones. Delays in converting the modifications from trial to permanent Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 12 of 21
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resulted in prolonged delinquency, and related additional interest payments and fees to borrowers, as well as added emotional stress.
62.
Borrowers could not reasonably avoid the injuries they suffered. Borrowers could reasonably expect that the agreements they entered into with their prior servicers would be honored by any subsequent servicer. They would have had no indication that Defendant would fail to perform as required under their modification agreements. And, in any event, borrowers lacked the ability to select another mortgage servicer. 63.
There is no countervailing benefit to competition or consumers from Defendant’s failure to honor its contractual obligations with regard to the transferred loans it received.
Count II (Unfair Increases to Permanent Monthly Payments) 64.
An act or practice is unfair under the CFPA if “the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers” and “such substantial injury is not outweighed by countervailing benefits to consumers or to competition.” 12 U.S.C. §§ 5531(c).
65.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 66.
Defendant unilaterally increased borrowers’ permanent monthly payments from the trial plan payment amount after the borrowers successfully completed their trial period plans. 67.
In numerous instances between January 2013 and December 2015, Defendant improperly increased borrowers’ permanent monthly payments, in many cases substantially. Some of these impacted borrowers defaulted on their modified loans, and some of those borrowers were foreclosed upon or otherwise lost their homes. Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 13 of 21
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68.
Borrowers could not reasonably avoid the injuries they suffered, including the unilateral changes to the terms of their modification agreements. Trial-period plan notices informed borrowers that their monthly payment after permanent modification would not significantly change and that changes would be limited to changes to the borrowers’ insurance or taxes.
69.
There is no countervailing benefit to competition or consumers from Defendant’s unilateral increases in monthly payments.
Count III (Deceptive Foreclosure Hold Promises) 70.
A representation, omission or practice is deceptive under the CFPA when it is likely to deceive a consumer acting reasonably under the circumstances, and where the representation, omission or practice is material. 71. The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 72.
In numerous instances, Defendant told borrowers that it would not foreclose on them while their loss mitigation applications were pending. Despite these written promises, Defendant foreclosed on some borrowers while their loss mitigation applications or appeals were pending, even after Defendant had actually approved a borrower’s loan modification. 73.
Defendant’s promises were likely to mislead borrowers, who were entitled to reasonably rely on their servicer’s written representations. 74.
Defendant’s explicit representations were material to borrowers’ financial decision-making with regard to their mortgages.
75.
Defendant’s representations were deceptive in violation of Sections 1031 and 1036 of the CFPA. 12 U.S.C. §§ 5531(a) and 5536(a)(1)(B). Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 14 of 21
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Count IV (Deceptive Statements Regarding PMI Cancellation) 76.
A representation, omission or practice is deceptive under the CFPA when it is likely to deceive a consumer acting reasonably under the circumstances, and where the representation, omission or practice is material. 77.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 78.
In numerous instances Defendant represented to otherwise eligible borrowers that they needed to reach 75% LTV on their mortgages in order to have their PMI premiums canceled.
79.
In fact, the HPA required otherwise eligible borrowers to reach 80% LTV on their mortgages in order to request cancellation of their PMI. 80.
Borrowers were entitled to reasonably rely on the express representations of their servicer.
81.
Defendant’s statements were material to Borrowers’ decisions about whether to seek cancellation of their PMI.
82.
Defendant’s false statements regarding borrowers’ obligations under the HPA were deceptive in violation of Sections 1031 and 1036 of the CFPA. 12 U.S.C. §§ 5531(a) and 5536(a)(1)(B).
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VIOLATIONS OF RESPA 83.
RESPA and its implementing regulation, Regulation X, pertain to certain acts and practices related to “federally related mortgage loans,” including servicer requirements related to notice of error and complaint resolution.
84.
The loans impacted by the allegations herein are federally related mortgage loans. Count V (Property Tax Payment Violations) 85.
Section 6(g) of RESPA, 12 U.S.C. § 2605(g), states that “[i]f the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes, insurance premiums, and other charges in a timely manner as such payments become due.”
86.
The requirements of Section 6(g) are further explained in Regulation X, 12 C.F.R. § 1024.17(k)(1), which states, among other requirements: “[i]f the terms of any federally related mortgage loan require the borrower to make payments to an escrow account, the servicer must pay the disbursements in a timely manner, that is, on or before the deadline to avoid a penalty, as long as the borrower’s payment is not more than 30 days overdue.” 87.
Among other obligations, Section 17 of Regulation X requires servicers to disburse property tax payments in a timely manner, 12 C.F.R. § 1024.17(k)(1). 88.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 16 of 21
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89.
In numerous instances between January 2012 and March 2015, Defendant failed to make disbursements for homeowners’ property taxes on time, causing borrowers to incur unnecessary penalties.
90.
Defendant’s failures to make borrowers’ property tax disbursements on time violated 12 C.F.R. § 1024.17(k)(1).
91.
These violations also constitute violations of the CFPA. 12 U.S.C. § 5536(a)(1)(A).
Count VI (Annual Escrow Analysis Violations) 92.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 93.
Section 17 of Regulation X requires servicers to conduct annual escrow analyses for borrowers, 12 C.F.R. § 1024.17(c)(3) and (f)(1). 94.
In numerous instances between 2011and 2016, Defendant failed to conduct timely escrow analyses for borrowers who filed for bankruptcy. 95.
Defendant’s failure to conduct timely annual escrow analyses violated 12 C.F.R. § 1024.17(c)(3) and (f)(1).
96.
These violations also constitute violations of the CFPA. 12 U.S.C. § 5536(a)(1)(A).
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VIOLATIONS OF THE HPA Count VII (Failure to Cancel PMI on Borrower Request) 97.
Under the HPA, servicers are required, under certain conditions, to cancel a requirement for private mortgage insurance on a specific date called the “cancellation date.” 12 U.S.C. § 4902(a).
98.
The “cancellation date,” as defined by HPA, 12 U.S.C. § 4901(2), means: (A) With respect to a fixed rate mortgage, at the option of the mortgagor, the date on which the principal balance of the mortgage: (i) Based solely on the amortization schedule then in effect for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 80 percent of the original value of the property securing the loan; or (ii) Based solely on actual payments, reaches 80 percent of the original value of the property securing the loan; and (B) With respect to an adjustable rate mortgage, at the option of the mortgagor, the date on which the principal balance of the mortgage: (i) Based solely on the amortization schedule then in effect for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 80 percent of the original value of the property securing the loan; or (ii) Based solely on actual payments, first reaches 80 percent of the original value of the property securing the loan.
99.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 100.
In numerous instances, Defendant failed to cancel the private mortgage insurance of borrowers who had met the HPA’s requirements and had requested cancellation on the borrowers’ cancellation date, in violation of 12 U.S.C. § 4902(a). 101.
Defendant’s failure to cancel private mortgage insurance as required violated 12 U.S.C. § 4902(a).
102.
These violations also constitute violations of the CFPA. 12 U.S.C. § 5536(a)(1)(A).
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Count VIII (Failure to Terminate PMI Automatically) 103.
Under the HPA, servicers are required to automatically terminate a borrower’s private mortgage insurance when the borrower’s loan reaches its “termination date.” 12 U.S.C. § 4902(b).
104.
The “termination date,” as defined by the HPA, 12 U.S.C. § 4901(18), means: (A) With respect to a fixed rate mortgage, the date on which the principal balance of the mortgage, based solely on the initial amortization schedule for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan; and (B) With respect to an adjustable rate mortgage, the date on which the principal balance of the mortgage, based solely on the amortization schedule then in effect for that mortgage, and irrespective of the outstanding balance for that mortgage on that date, is first scheduled to reach 78 percent of the original value of the property securing the loan.
105.
The Bureau incorporates by reference the allegations of Paragraphs 1 to 57. 106.
In numerous instances between January 1, 2013 and December 31, 2015, Defendant failed to maintain accurate PMI termination dates for borrowers. As a result, Defendant failed to terminate those borrowers’ PMI premiums on their scheduled termination date, overcharging these borrowers for unnecessary PMI premiums in violation of 12 U.S.C. § 4902(b).
107.
Defendant’s failure to terminate private mortgage insurance as required violated 12 U.S.C. § 4902(b).
108.
These violations also constitute violations of the CFPA. 12 U.S.C. § 5536(a)(1)(A).
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Prayer for Relief The Bureau, pursuant to Sections 1054 and 1055 of the CFPA, 12 U.S.C. §§ 5564 and 5565, and the Court’s own equitable powers, requests that the Court: 1.
Permanently enjoin Defendant from committing future violations of the CFPA, RESPA, and HPA, and enter such other injunctive relief as appropriate; 2.
Award such relief as the Court finds necessary to redress injury to consumers, including, but not limited to, rescission or reformation of contracts; refund of moneys; restitution; and payment of damages or other monetary relief; 3.
Award such relief as the Court finds necessary to disgorge Defendant of unlawful gains;
4.
Award civil money penalties against the Defendant; 5.
Award costs against the Defendant; and 6.
Award additional relief as the Court may deem just and proper.
Dated: December 7, 2020
Respectfully Submitted
Attorneys for Plaintiff Bureau of Consumer Financial Protection,
JOHN C. WELLS Deputy Enforcement Director
RICHA S. DASGUPTA Assistant Deputy Enforcement Director
/s/ Christian H. Woolley Christian H. Woolley Senior Litigation Counsel Bureau of Consumer Financial Protection 1700 G Street, NW Case 1:20-cv-03550 Document 1 Filed 12/07/20 Page 20 of 21
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Washington, DC 20552 E-mail: [email protected] Phone: 202-435-9189 Pennsylvania Bar No. 205486
Jean M. Healey Senior Litigation Counsel Bureau of Consumer Financial Protection 1700 G Street, NW Washington, DC 20552 Email: [email protected] Phone: 202-435-7514 Massachusetts Bar No. 660456
J. Douglas Wilson Senior Litigation Counsel Bureau of Consumer Financial Protection 1700 G Street, NW Washington, DC 20552 E-mail: [email protected] Phone: 202-435-9151 DDC Bar No: 991055
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Stipulation ()
PDF of this document (24 pages)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
BUREAU OF CONSUMER FINANCIAL PROTECTION,
(700 G Street, NW
Washington, DC 20552 Case No. 1:20-cv-3550
Plaintiff, Vv.
NATIONSTAR MORTGAGE LLC, d/b/a MR. COOPER,
8950 Cypress Waters Boulevard Coppell, TX 75019
Defendant.
PROPOSED STIPULATED FINAL JUDGMENT AND ORDER
The Bureau of Consumer Financial Protection (“Bureau”) commenced this civil action on December 7, 2020 to obtain injunctive and monetary relief and civil penalties from Defendant Nationstar Mortgage LLC, d/b/a Mr. Cooper. The Complaint alleges violations of (1) Sections 1031 and 1036 of the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. §§ 5531, 5536; (2) Sections 6 and 19 of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2605, 2617, and the regulations promulgated thereunder at Regulation X, 12 C.F.R. § 1024 et seq. (““RESPA Mortgage Servicing Rule”); and (3) Sections 4902(a) and (b) of the Homeowners Protection Act of 1998, 12 U.S.C. § 4902 (“HPA”).
The Bureau and Defendant agree to entry of this Stipulated Final Judgment and Order (“Order”), without adjudication of any issue of fact or law, to settle and resolve all matters in
dispute arising from the conduct alleged in the Complaint.
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I FINDINGS 1. This Court has jurisdiction over the parties and the subject matter of this action. 2, The Complaint alleges claims for relief under (1) Sections 1031 and 1036 of the
Consumer Financial Protection Act (“CFPA”), 12 U.S.C. 8§ 5531, 5536; (2) Sections 6 and 19 of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2605, 2617, and the regulations promulgated thereunder at Regulation X, 12 C.F.R. § 1024 et seq. (“RESPA Mortgage Servicing Rule”); and (3) Section 4902(b) of the Homeowners Protection Act of 1998, 12 U.S.C. § 4902(b) (“SHPA”).
3, Defendant neither admits nor denies the allegations in the Complaint, except as specified in this Order. For purposes of this Order, Defendant admits the facts necessary to establish the Court’s jurisdiction over it and the subject matter of this action.
4. Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order and any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each Party agrees to bear its own costs and expenses, including, without limitation, attorneys’ fees.
5. Entry of this Order is in the public interest.
Il DEFINITIONS
6. The following definitions apply to this Order:
a. “Affected Consumers” includes any Borrower whose mortgage loan was serviced by Defendant between January 1, 2012 and the Effective Date and: i. from whom Defendant collected monthly modified mortgage loan payment amounts where the amounts charged for principal and interest exceeded the principal and interest amounts contained in the
trial plan agreement (“Modification Payment Increase Borrowers”);
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ii. from whom Defendant collected escrow shortages for borrowers ona completed Chapter 13 bankruptcy plan that were not legally due (“Escrow Borrowers”);
- lil, for whom Defendant failed to timely remit property taxes (“Tax Disbursement Borrowers”);
iv. for whom Defendant failed to timely remove private mortgage insurance as required by 12 U.S.C. §4902(a) or (b) (“PMI Borrowers”);
v. upon whom Defendant foreclosed while the borrowers were pursuing loss mitigation options (“Unlawful Foreclosure Borrowers”); or
vi. whose in-flight modifications Defendant failed to appropriately identify when a loan was being onboarded for servicing (“In-flight Modification Borrowers”).
b. “Annual Lookback” means an annual audit of Defendant’s mortgage servicing portfolio designed to identify Modification Payment Increase Borrowers who continued to pay under modified monthly principal and interest payment amounts that exceed their trial modification plan’s monthly principal and interest payment amounts, and for whom additional redress is required.
c. “Board” means Defendant’s duly-elected and acting Board of Directors, or similar body with commensurate powers and authorities.
d. “Borrower” means a borrower, co-borrower, or successors-in-interest with a residential mortgage loan.
e. “Declared Remediation” means the $57,723,049 in redress payments or credits that Defendant made to Affected Consumers prior to the Effective Date, for the purpose of providing remediation for Borrower injury resulting from the conduct described in the Complaint. Declared Remediation consists of the following categories and amounts of redress:
i. $16,242,809 to In-flight Modification Borrowers;
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k.
ii. $9,728,960 to Modification Payment Increase Borrowers; iii. $93,307 to Tax Disbursement Borrowers;
iv. $10,832,738 to PMI Borrowers; and ‘
v. $20,825,235 to Escrow Borrowers.
“Defendant” means Nationstar Mortgage LLC, and its successors and assigns. “Effective Date” means the date on which the Order is entered by the Court. “Modification Payment Increase” means the amount by which a Borrower’s monthly modified mortgage loan principal and interest payment amount exceeds their monthly trial modification plan’s principal and interest payment amount.
“Regional Director” means the Regional Director for the Southeast Region for the Office of Supervision for the Bureau of Consumer Financial Protection, or his or her delegate.
“Related Consumer Action” means a private action by or on behalf of one or more consumers or an enforcement action by another governmental agency brought against the Defendant based on substantially the same facts as described in the Complaint.
“Servicing Transfer” means a situation in which the Defendant is acting as a Transferee Servicer or Transferor Servicer.
“System” means a location in which electronically-stored information is captured, recorded, or maintained that is within the Defendants’ possession, custody, or control, including, without limitation, applications, databases, and other locations in which electronically-stored information is captured,
recorded, or maintained by a third-party.
. “Transferee Servicer” is synonymous in meaning and equal in scope to the
definition of the term, as of the Effective Date, in 12 C.F.R. § 1024.31.
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n. “Transferor Servicer” is synonymous in meaning and equal in scope to the
definition of the term, as of the Effective Date, in 12 C.F.R. § 1024.31.
Ill CONDUCT PROVISIONS IT IS ORDERED that:
Error Resolution 7. Defendant and its officers, agents, servants, employees, and attorneys, and all
other persons in active concert or participation with them, who have actual notice of this Order, whether acting directly or indirectly, must enhance and implement its policies, processes, and controls for handling consumer complaints, disputes, and notices of error (collectively “Complaint(s)”), whether communicated in English or a foreign language, in order to:
a. maintain an online consumer complaint form that is readily accessible to Borrowers, allows Borrowers to submit full and complete information along with their consumer complaints, and provides Borrowers a receipt indicating the time and date of submission;
b. provide timely and accurate information to Borrowers about how to submit Complaints;
c. maintain sufficient and trained personnel devoted to researching and resolving Complaints;
d. consider all available information, including that provided by the complainant and in Defendant’s Systems, to resolve Complaints; e. accurately document each error identified in a Complaint and the resolution of the Complaint;
f. ifan error had occurred, accurately and fully correct the errors, and
communicate such corrections to the complainant; and
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g. conduct root cause analyses where Nationstar has reason to believe Complaints may be related to systemic errors, in order to identify all applicable systemic errors and identify other Borrowers who may be affected by such errors.
Escrow Management 8. Defendant and its officers, agents, servants, employees, and attorneys who have actual notice of this Order, whether acting directly or indirectly, shall:
a. accurately and timely conduct an escrow analysis of a Borrower’s account at the end of the escrow account computation year where Defendant maintains an escrow account for the Borrower, as required by 12 C.F.R. § 1024.17(c)—-(f);
b. accurately and timely pay a Borrower’s hazard insurance and taxes where Defendant maintains an escrow account for the Borrower, as required by 12 C.F.R. § 1024.17(k);
c. include accurate information in a Borrower’s initial, annual, and short-year escrow statements and periodic statements, as required by 12 C.F.R. 8 1024.17(g)—(j); and
d. communicate to the Borrower and, where required (or requested by the Borrower), third parties (e.g., courts) the amounts, including the escrow component of a monthly mortgage payment amount, that a Borrower owes.
Servicing Transfers 9. Defendant and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who have actual notice of this Order, whether acting directly or indirectly, must maintain policies and procedures that are
reasonably designed to facilitate transfer of information during servicing transfers, as required
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by 12 C.F.R. § 1024.38(a)-(b). These policies and procedures must include, but not be limited to, the following affirmative actions in connection with Servicing Transfers:
a. communicate with counterparties sufficiently in advance of a Servicing Transfer to allow for the development of a servicing transfer plan, which shall:
i. identify the obligations of all relevant parties, ii, include a communications plan,
iil, include a testing plan with testing protocols to evaluate the compatibility of the transferred data with the Transferee Servicer’s systems and data mapping protocol,
iv. include a timeline with key milestones,
v. include an escalation plan for potential problems, and
vi. determine whether a Servicing Transfer can be implemented successfully in a single batch of all accounts and, if it cannot, implement alternative protocols, such as splitting the transfer into several smaller bundles of accounts to be transferred in subsequent months, to ensure that the Transferee Servicer can comply with its servicing obligations for the transferred loans;
b. identify material issues that could potentially impact the accuracy or completeness of the loan data or documentation to be transferred as well as each servicer’s ability to comply with the law or investor guidelines with respect to the transferred loans;
c, identify any loans in default, active foreclosure and bankruptcy, and, where applicable, require documentation regarding loss mitigation activity for each loan, including status and notes pertaining to the loss mitigation action, copies of agreements entered into with a borrower on a loss mitigation option,
and any analysis by a servicer with respect to potential recovery from a non-
performing mortgage loan; and
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d. engage in quality control work after a transfer of preliminary data to validate that the data on the Transferee Servicer’s system matches the data submitted by the Transferor Servicer, prioritizing data mapping errors that occurred during the de-boarding or on-boarding process for resolution.
Loss Mitigation Practices 10. Defendant and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who have actual notice of this Order, whether acting directly or indirectly, must not offer and accept a permanent mortgage modification where the modified monthly principal and interest payment amount exceeds the monthly principal and interest payment amount in the relevant trial modification agreement, unless permitted to do so:
a. by state or federal law;
b. under specific modification program rules, official guidelines or official interpretations;
ec. under applicable investor requirements; or
d. in order to offer a permanent modification which is different from the trial modification agreement due to a failure by the Borrower to make all required monthly payments according to the trial modification agreement, and which Defendant would otherwise not be permitted to offer.
Private Mortgage Insurance 11. Defendant and its officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with them, who have actual notice of this Order, whether acting directly or indirectly, must enhance and implement reasonable policies, processes, and controls related to borrowers’ Private Mortgage Insurance (“PMI”) in order to,
among other things:
a. accurately communicate the requirements for canceling and terminating PMI
to borrowers; and
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b. ensure accurate and timely PMI cancelation and termination.
Annual Lookback and Declared Remediation Audit
12, Defendant must conduct an Annual Lookback for four years after the Effective Date to identify Modification Payment Increase Borrowers who made a mortgage payment that included a Modification Payment Increase in that year. Defendant will provide redress to identified Modification Payment Increase Borrowers in accordance with the Redress Plan referenced in Paragraphs 24 and 25 in the form of: (1) an account credit for those Modification Payment Increase Borrowers whose loans are actively being serviced by Defendant at the time of the Annual Lookback; or (2) a check for those Modification Payment Increase Borrowers whose loans are not actively being serviced by Defendant at the time of the Annual Lookback.
13. Defendant must conduct an audit within 30 days of the Regional Director’s determination of non-objection to Defendant’s Redress Plan to ensure all Declared Remediation has been distributed to Affected Borrowers as required by this Order (Declared
Remediation Audit). The Declared Remediation Audit must include at a minimum, without
limitation:
a
The amount and type of redress (i.e., credit or check) made to each Affected
Consumer;
b. The permanent address associated with each Affected Consumer when the borrower received the applicable redress;
c. The date on which the Affected Consumer received, or was sent, the applicable redress;
d. The applicable conduct by the Defendant for which the redress was provided;
e. Acertification, signed by the Board and sworn under penalty of perjury, that
states that the Declared Remediation has been provided to Affected
Consumers as of the Effective Date.
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IV Compliance Plan
IT IS FURTHER ORDERED that:
14. Within 45 days of the Effective Date, Defendant must submit to the Regional Director for review and determination of non-objection a comprehensive compliance plan designed to ensure that Defendant’s mortgage servicing practices and obligations addressed in Section III of this Order comply with all applicable Federal consumer financial laws and the terms of this Order (Compliance Plan), The Compliance Plan must include, at a minimum:
a. detailed steps for addressing each action required by this Order; and b. specific timeframes and deadlines for implementation of the steps described above.
15. The Regional Director will have the discretion to make a determination of nonobjection to the Compliance Plan or direct Defendant to revise it. If the Regional Director directs Defendant to revise the Compliance Plan, Defendant must revise and resubmit the Compliance Plan to the Regional Director within 20 days of the date that the Regional Director directs Defendant to revise the Compliance Plan.
16. After receiving notification that the Regional Director has made a determination of non-objection to the Compliance Plan, Defendant must implement and adhere to the steps,
recommendations, deadlines, and timeframes outlined in the Compliance Plan.
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Vv Role of the Board
IT IS FURTHER ORDERED that:
17. The Board must review all submissions (including plans, reports, programs, policies, and procedures) required by this Order prior to submission to the Bureau.
18. The Board shall ensure, including through sworn certification pursuant to Paragraph 13 of this Order, that Declared Remediation has been provided to Affected Consumers as of the Effective Date;
19. Although this Order requires Defendant to submit certain documents for review or non-objection by the Regional Director, the Board will have the ultimate responsibility for proper and sound management of Defendant and for ensuring that Defendant comply with the laws that the Bureau enforces, including Federal consumer financial laws and this Order.
20. In each instance that this Order requires the Board to ensure adherence to, or perform certain obligations of Defendant, the Board must:
a. Authorize whatever actions are necessary for Defendant to fully comply with
the Order;
b. Require timely reporting by management to the Board on the status of such compliance obligations; and
c. Require timely and appropriate corrective action to remedy any material non-
compliance with any failures to comply with Board directives related to this
Section.
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MONETARY PROVISIONS VI Order to-Pay Redress IT IS FURTHER ORDERED that:
21. Ajudgment for monetary relief is entered in favor of the Bureau and against Defendant in the amount of $15,623,305 (Judgment Amount) to be deposited into an escrow account established for the sole purpose of providing redress to Affected Consumers as set forth in Paragraph 22 (Escrow Account).
22. No later than 10 days after the Effective Date, Defendant must deposit $15,623,305 into the Escrow Account as required by this Section and according to instructions provided by the Bureau. The Escrow Account will be administered pursuant to the Redress Plan, described in Paragraphs 24 and 25, by a settlement administrator (Administrator) who will be retained and paid for by Defendant without any charge against the escrowed funds. The Administrator will issue redress checks to Affected Consumers within 45 days of the receipt of a non-objection to the Redress Plan referred to in Paragraphs 24 and 25. The Administrator will provide the redress as required by, and in accordance with, the Redress Plan, as follows:
a. $13,500,000 million to Modification Payment Increase Borrowers as redress for Modification Payment Increases incurred prior to the Effective Date;
b. $2,023,305 to Escrow Borrowers as redress for Defendant’s collection of amounts relating to escrow shortages and who have not already received Declared Remediation for such collection; and
c. $100,000 to Unlawful Foreclosure Borrowers as redress for foreclosurerelated injuries.
23. Defendant shall file a notice with the Court after the Judgment Amount is
deposited into the Escrow Account as required by Paragraph 22. The full and timely deposit of
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Judgment Amount into the Escrow Account pursuant to this Order shall satisfy the judgment for monetary relief.
24. Within 30 days of the Effective Date, Defendant must submit to the Regional Director for review and non-objection a comprehensive written plan for providing redress consistent with this Order (Redress Plan). The Regional Director will have the discretion to make a determination of non-objection to the Redress Plan or direct the Defendant to revise it. If the Regional Director directs the Defendant to revise the Redress Plan, the Defendant must revise and resubmit the Redress Plan to the Regional Director within 20 days. After receiving notification that the Regional Director has made a determination of non-objection to the Redress Plan, the Defendant must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Redress Plan.
25. The Redress Plan must:
a. Specify how Defendant will identify Affected Consumers for the purpose of distributing redress under Paragraph 22 of this Order;
b. Include the form of the letter (Redress Notice) and envelope to be sent notifying Affected Consumers, who are entitled to redress pursuant to the Redress Plan, of their right to redress; the Redress Nolice must include a statement that the payment is made in accordance with the terms of this Order; Defendant must not include in any envelope containing a Redress Notice any materials other than the approved Redress Noticés and redress checks, unless Defendant has written confirmation from the Regional Director that the Bureau does not object to the inclusion of such additional materials;
c. Describe the process for distributing redress to Affected Consumers, and include the following requirements:
i, Prior to sending redress checks and Redress Notices, Defendant must
make reasonable attempts to obtain a current address for each Affected
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Consumer entitled to redress using, at a minimum, the National Change of Address system; and ii, Defendant must mail a redress check(s) and the Redress Notice(s) to each Affected Consumer entitled to redress under the Redress Plan. 26. After completing the Redress Plan, if the total amount of redress distributed to Affected Consumers from the Escrow Account is less than $15,623,305, within 45 days of the completion of the Redress Plan, Defendant must ensure that all uncashed checks issued to Affected Consumers according to the Redress Plan, that have passed their stale date, are escheated to the state of the borrower’s last known permanent address, in order to permit such borrower, or such borrower’s rightful heirs, to claim such amount pursuant to that state’s processes for collecting unclaimed funds.
27. Defendant may not condition the payment of any redress to any Affected Consumer under this Order on that Affected Consumer waiving any right. vil Order to Pay Civil Money Penalty IT IS FURTHER ORDERED that:
28. Under Section 1055(c) of the CFPA, 12 U.S.C. § 5565(c), by reason of the violations of law alleged in the Complaint and taking into account the factors in 12 U.S.C. 8
5565(c)(3), Defendant must pay a civil money penalty of $1,500,000 to the Bureau.
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29. Within 10 days of the Effective Date, Defendant must pay the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions.
30. The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by Section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).
31. Defendant shall file a notice with the Court when the civil money penalty is paid as required by Paragraph 29. The full and timely payment of the civil money penalty to the Bureau shall satisfy the judgment for the civil money penalty.
32. Defendant must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendant may not:
a. Claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or
b. Seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order.
Vill Additional Monetary Provisions IT IS FURTHER ORDERED that:
33. Inthe event of any default on Defendant’s obligations to make payment under
this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any
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outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.
34. Defendant must relinquish all dominion, control, and title to the funds paid under this Order to the fullest extent permitted by law and no part of the funds may be returned to Defendant.
35. The facts alleged in the Complaint will be taken as true without further proof in any subsequent litigation by or on behalf of the Bureau in a proceeding to enforce its rights to any payment or monetary judgment pursuant to this Order, such as a nondischargability complaint in any bankruptcy case.
36. The facts alleged in the Complaint establish all elements necessary to sustain an action by the Bureau under Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and for such purposes this Order will have collateral estoppel effect against Defendant, even in Defendant’s capacity as debtor-in-possession.
37. Under 31 U.S.C. § 7701, Defendant, unless it has already done so, must furnish to the Bureau its taxpayer-identification number, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
38. Onan annual basis for 10 years from the Effective Date, Defendant must provide the Regional Director in writing with the total number of final judgments, consent orders, or settlements in Related Consumer Actions during the preceding year (Related Consumer Action Report). The Related Consumer Action Report must indicate the amount of redress, if any, that Defendant paid or is required to pay to consumers and describe the consumers or classes of consumers to whom that redress has been or will be paid. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action Defendant may not argue that Defendant is entitled to, nor may Defendant benefit by, any offset or reduction of any monetary remedies imposed in the Related Consumer Action because of the civil money penalty paid in this action or because of any payment that the Bureau makes from the Civil Penalty Fund. If
the court in any Related Consumer Action offsets or otherwise reduces the amount of
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compensatory monetary remedies imposed against Defendant based on the civil money penalty paid in this action or based on any payment that the Bureau makes from the Civil Penalty Fund, Defendant must, within 30 days after entry of a final order granting such offset or reduction, notify the Bureau and pay the amount of the offset or reduction to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action. COMPLIANCE PROVISIONS IX Reporting Requirements IT IS FURTHER ORDERED that:
39. For 10 years from the Effective Date, Defendant must notify the Bureau of any development that may affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendant; or a change in Defendant’s name or address. Defendant must provide this notice at least 30 days before the development or as suun as practicable after the learning about the development, whichever is sooner.
40. Within 7 days of the Effective Date, Defendant must:
a. Designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant;
b. Identify all businesses for which Defendant is the majority owner, or that Defendant directly or indirectly controls, by all of their names, telephone numbers, and physical, postal, email, and Internet addresses; and
c. Describe the activities of each such business, including the products and
services offered, and the means of advertising, marketing, and sales.
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41. For 10 years from Effective Date, Defendant must report any change in the information required to be submitted under Paragraph 39 at least 30 days before the change or as soon as practicable after learning about the change, whichever is sooner.
42. Within 90 days of receiving notice of non-objection to the Compliance Plan, and again one year after receiving notice of non-objection to the Compliance Plan, Defendant must submit to the Regional Director an accurate written compliance progress report sworn to under penalty of perjury (Compliance Report) that has been approved by the Board which, at a minimum:
a. Lists each applicable paragraph and subparagraph of the Order and describes in detail the manner and form in which Defendant has complied with each such paragraph and subparagraph of this Order;
b. Describes in detail the manner and form in which Defendant has complied with the Redress Plan and Compliance Plan; and
c. Attaches a copy of each Order Acknowledgment obtained under Section X, unless previously submitted to the Bureau.
x Order Distribution and Acknowledgment IT IS FURTHER ORDERED that,
43. | Within 7 days of the Effective Date, Defendants must submit to the Regional Director an acknowledgment of receipt of this Order, sworn under penalty of perjury.
44. Within 30 days of the Effective Date, Defendant must deliver a copy of this Order
to each of its Board members and executive officers as well as to any managers, employees,
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service providers, or other agents and representatives who have management responsibilities related to the subject matter of the Order.
45. For 5 years from the Effective Date, Defendant must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section IX, any future board members.and executive officers before they assume their responsibilities.
46. Defendant must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.
XI Recordkeeping
IT IS FURTHER ORDERED that
47. Defendant must create, or if already created must retain, for at least 7 years from the Effective Date, the following business records: a. All documents and records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Bureau; and b. All documents and records pertaining to the Redress Plan, described in
Section VI above.
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48. Defendant must maintain, for at least 5 years from the Effective Date or 5 year's after creation, whichever is longer, all Complaints (whether received directly or indirectly, such as through a third party), and any responses to those Complaints.
49. Defendant must make these materials available to the Bureau upon the Bureau’s request.
XII Notices IT IS FURTHER ORDERED that:
50. Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “CFPB v. Nationstar LLC, Case No. 1:20-cv-3550,” and send them by overnight courier or first-class mail to the below address and contemporaneously by email to
Regional Director, CFPB Southeast Region Peachtree Summit Building 401 W. Peachtree Street Atlanta, GA 30308 XIIl Cooperation with the Bureau IT IS FURTHER ORDERED that:
51. Defendant must cooperate fully to help the Bureau determine the identity and
location of, and the amount of injury sustained by, each Affected Consumer. Defendant must
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provide such information in its or its agents’ possession or control within 14 days of receiving a written request from the Bureau.
XIV Compliance Monitoring IT IS FURTHER ORDERED that, to monitor Defendant’s compliance with this Order:
52. Within 20 days of receipt of a written request from the Bureau, Defendant must submit compliance reports or other requested information related to requirements of this Order, which must be sworn under penalty of perjury; provide sworn testimony related to requirements of this Order and Defendant’s compliance with those requirements; or produce documents related to requirements of this Order and Defendant’s compliance with those requirements.
53. Defendant must permit Bureau representatives to interview about the requirements of this Order and Defendant’s compliance with those requirements any employee or other person affiliated with Defendant who has agreed to such an interview. The person interviewed may have counsel present.
54. Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6.
) XV Release
55. “The Busteau releases and discharges Defendant from all potential liability for law violations that the Bureau has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knows about them as of the Effective Date.
56. The Bureau may use the practices alleged in the Complaint in future
enforcement actions against Defendant or its affiliates, including, without limitation, to
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establish a pattern or practice of violations ar the continuation of a pattern or practice of violations, or to calculate the amount of any penalty. 57. This release does not preclude or affect any right of the Bureau to determine and ensure compliance with this Order, or to seek penalties for any violations of the Order. XVI
Retention of Jurisdiction
IT IS FURTHER ORDERED that:
58. The Court will retain jurisdiction of this matter for the purpose of enforcing this
Order.
IT IS SO ORDERED.
DATED this 4 day of December, 2020.
fo
Uni fea stat atesDis ws Court Judge
DZ Powe,
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Dated: December 7, 2020 Respectfully Submitted,
Attorneys for Plaintiff Bureau of Consumer Financial Protection,
JOHN C. WELLS Deputy Enforcement Director
RICHA S. DASGUPTA Assistant Deputy Enforcement Director
/s/ Christian H. Woolley
Christian H. Woolley
Senior Litigation Counsel
Bureau of Consumer Financial Protection 1700 G Street, NW Washington, DC 20552
E-mail: [email protected] Phone: 202-435-9189
Pennsylvania Bar No. 205486
Jean M. Healey
Senior Litigation Counsel
Bureau of Consumer Financial Protection 1700 G Street, NW
Washington, DC 20552
Email: [email protected] Phone: 202-435-7514
Massachusetts Bar No. 660456
J. Douglas Wilson
Senior Litigation Counsel
Bureau of Consumer Financial Protection 1700 G Street, NW
Washington, DC 20552
E-mail: [email protected]
Phone: 202-435-9151
DDC Bar No: 991055
Page 46
Case 1:20-cv-03550-JEB Document 3 Filed 12/08/20 Page 24 of 24
For Defendant:
/s/ Jesse K. Bray
JESSE K. BRAY
President & Chief Executive Officer Nationstar Mortgage LLC, dba
Mr. Cooper
8950 Cypress Waters Blvd
Coppell, TX 75019
/s/ Thomas M. Hefferon
THOMAS M. HEFFERON DC Bar No. 461750 MATTHEW L., RIFFEE
DC Bar No. 1022979 Goodwin Procter LLP
1900 N Street, NW Washington, DC 20036
Tel: 202-346-4000 [email protected] [email protected]