Allegations that PHH Mortgage Corp. has been deficient in its mortgage origination and servicing practices in New York have been been settled.
The
Multistate Mortgage Committee, a group of several state regulators, conducted an examination of PHH that uncovered weaknesses.
PHH was allegedly found to have failed to provide accurate Good Faith Estimate disclosures to mortgage borrowers for their residential loans.
Those were among the allegations made in an announcement Wednesday by
New York Gov. Andrew M. Cuomo.
Some unwary borrowers allegedly saw their fees increase at closing. In some cases, PHH failed
to provide documentation showing that borrowers received discounts for which they had bargained.
No controls were in place at PHH to prevent loan originators from originating for PHH entities that they weren’t licensed under or from originating loans after their license expired.
Another issue in originations was a compensation plan that failed to prevent originators from steering customers into risky or unnecessarily high-cost loans.
In servicing,
the Mount Laurel, New Jersey-based firm is accused of discrepancies in how foreclosures were documented and processed. Officials alluded to potential robo-signing practices.
PHH also allegedly failed to adequately monitor the operations of outside vendors.
In addition, PHH improperly assessed $1.2 million in attorneys fees against distressed New York borrowers due to a coding error in an automated invoice processing system.
“Despite first discovering this error in June 2014, PHH delayed disclosing the issue to the Department for 18 months,” Cuomo’s announcement said. “PHH has represented to the Department that it has made full financial restitution to borrowers affected by this error.”
Cuomo
indicated that PHH and affiliate PHH Home Loans LLC have agreed to a consent order that includes a $28 million fine.
In addition, a third-party auditor must be engaged as part of the order.
Cuomo claims PHH
violated federal and New York laws designed to protect mortgage borrowers.
“We have agreed to resolve concerns raised by the DFS arising from legacy servicing and origination examinations conducted between 2010 and 2014 in order to avoid the distraction and expense of litigation,” parent PHH Corp. said in a written statement. “While we provided detailed responses to the examination findings and worked cooperatively with the DFS on this matter, we concluded that settling these matters is in the best interest of PHH and its constituents.
“As acknowledged by the DFS in the agreement, PHH has made substantial strides in improving our servicing operations.”
