PHH Corp. will pay $45 million to settle a complaint brought by a consortium of 49 states and the District of Columbia over alleged mortgage servicing violations that occurred between between Jan. 1, 2009 and Dec. 31, 2012.
The settlement with the Multi-State Mortgage Committee, which encompasses 49 state attorneys general, the District of Columbia, and more than 45 state mortgage regulators, stems from allegations that PHH “threatened foreclosure and conveyed conflicting messages to certain borrowers engaged in loss mitigation” during the years following the financial crisis that began in September 2008.
As per the settlement agreement, the mortgage lender and servicer will pay more than $30 million to borrowers who lost their homes to foreclosure or were referred for foreclosure during the period in question.
Borrowers whose homes were lost in foreclosure during that period will qualify for a minimum payment of $840, while borrowers who faced foreclosures that PHH initiated but did not complete will receive a minimum payment of $285.
In total, the settlement includes $30.4 million in payments to borrowers; $1 million for claims administration; $5 million to the states that headed up the investigation and negotiations; and a separate $8.8 million to state mortgage regulators.
The settlement also requires PHH to adopt new servicing standards, which the company says it already has in place.
New Hampshire is the only state that did not participate in the settlement.
In addition to allegedly mishandling foreclosures, PHH also, according to the settlement, failed to maintain adequate documentation to determine whether it had standing to foreclose; failed to appropriately respond to certain borrowers’ complaints and reasonable requests for information and assistance; failed to accurately apply payments made by certain borrowers in a timely manner; failed to properly oversee third party vendors retained for servicing and foreclosure operations; failed to preserve accurate account statements; and failed to adequately process borrowers’ applications for loan modifications.
“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 says in a statement. “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.
“In fact, the servicing standards that we are required to adopt under the terms of the settlement are largely PHH’s servicing standards today,” the company adds. “We have made and will continue to make the necessary enhancements in our operations to ensure we remain compliant and continue to serve our customers in a fair and appropriate manner.”