A settlement has been reached between PHH Corp.’s home-lending unit and dozens of states over alleged servicing abuses that took place during the foreclosure crisis.
PHH disclosed Wednesday that subsidiary PHH Mortgage Corp. has reached a $45 million settlement with the Multi-State Mortgage Committee and state attorneys general.
The agreement resolves alleged violations of state and federal foreclosure, modification and servicing
laws by the Mount Laurel, New Jersey-based company from Jan. 1, 2009, until Dec. 31, 2012.
During the period covered in the settlement, U.S. mortgage servicers were grappling with a severely escalated level of distressed loans and foreclosures.
Data from CoreLogic Inc indicate that an average of 1.6 million foreclosure were completed per year from 2010 to 2012. In 2016, just 0.3 million foreclosures were completed.
Included in the settlement is $31.5 million in consumer relief that will be paid to 52,000 borrowers in 47 states who were subjected to foreclosures, according to the California Department of Business Oversight. Foreclosed borrowers will qualify for a minimum $840 payment, while a minimum $285 payment will be made to borrowers who faced foreclosure but didn’t lose their homes. An administrator will distribute the payments.
The total also includes an $8.8 million administrative penalty.
“Examinations conducted by the multi-state group found that PHH failed to exercise proper control over foreclosure documents, allowing unauthorized executions, inconsistent signatures, and improper certification and notarization, all of which affected the integrity of documents relied on in the foreclosure process,” California’s DBO stated. “In addition, the examinations found deficiencies in other internal controls, loan servicing and modifications.”
In addition, according to New Jersey Attorney General Christopher S. Porrino,
payments will be made to 12 state attorneys general who led the investigation and negotiations.
The settlement requires PHH to adopt negotiated servicing standards and implement a testing-and-reporting process for a three-year period.
“We have agreed to resolve concerns raised by the MMC arising from its servicing examination conducted in 2010 and believe that settling this matter is in the best interest of PHH and its constituents,” PHH’s statement said. “Our decision to resolve this legacy matter under the terms of the settlement agreement and consent orders is not an admission of liability or that we violated any applicable laws, regulations or rules governing the conduct and operation of our servicing business during the relevant time frame.”
The settlement comes as PHH has been dramatically shrinking its business. Its primary mortgage servicing portfolio has been slashed from $130 billion at the end of 2013 to less than $10 billion as of Sept. 30, 2017.
PHH said that the settlement is already included in its recorded liability.
