Delaware, others settle with Nationstar Mortgage

DOVER — The Department of Justice announced Monday that Delaware, along with several other state attorneys general and federal and state agencies, has reached a settlement with Nationstar Mortgage.

Nationstar, which does business as “Mr. Cooper” and is the country’s fourth-largest mortgage servicer, will pay out $86.3 million to more than 55,000 individuals.

In Delaware, the settlement affects 197 loans for a total of $227,771.26.

The consent judgment resolves allegations of violations of consumer protection laws with Nationstar’s servicing of mortgage loans. Thousands of borrowers had problems when their loans were transferred to Nationstar, leading to foreclosure in some circumstances.

The consent judgment also requires Nationstar to follow a detailed set of rules in how it handles certain mortgage loans. These servicing standards are more comprehensive than existing laws are and will be in place for three years, starting Jan. 1.

The state attorneys general negotiated the settlement with the state mortgage regulators and the federal Consumer Financial Protection Bureau, which filed separate settlement documents.

In 2012, Nationstar began purchasing mortgage servicing portfolios from competitors and grew quickly into the nation’s largest nonbank servicer. As loan data was transferred to Nationstar, borrowers who had sought assistance with payments and loan modifications sometimes fell through the cracks, according to the lawsuit. Borrowers in this category will receive a guaranteed minimum payment of $840 as part of the settlement.

Other borrowers suffered damages when Nationstar failed to oversee third-party vendors hired to inspect and maintain properties owned by delinquent borrowers and improperly changed locks on their homes, per the litigation. These borrowers will receive a guaranteed minimum payment of $250.

A settlement administrator will send a claim form to eligible borrowers in 2021. Nationstar has already provided some of the relief outlined in the settlement.

“We are holding Nationstar accountable for harming homeowners by improperly servicing their mortgage loans,” Delaware Attorney General Kathy Jennings said in a statement. “The new servicing standards in this settlement will help ensure Nationstar does not repeat this conduct.”

The agreement also requires Nationstar to conduct audits and provide those results to a committee of states to ensure compliance with the settlement.