Acting Attorney General John J. Hoffman and Division of Law Director Christopher S. Porrino announced today that the state of New Jersey has entered into a $6.25 million settlement with PHH Mortgage Corporation, which will resolve allegations the company misled financially struggling homeowners who sought loan modifications or other help to avoid mortgage delinquency or foreclosure.
PHH is the nation’s ninth-largest residential mortgage servicer, and the fourth largest non-bank residential mortgage servicer. The company admits no wrong doing under terms of its settlement.
The settlement includes $3.61 million in restitution for approximately 2,000 borrowers nationwide whose loans are serviced by PHH. For example, 44 borrowers whose homes were sold in sheriff’s sales while loan modifications were pending will receive $10,000 each.
Payments to consumers will be made within 30 days of the settlement’s effective date. The remaining $2.64 million will be paid to the State. PHH will also adopt nationwide servicing standards set forth in the Consent Judgment.
Borrower complaints led the attorney general to began its investigation into PHH in 2011. PHH cooperated in the State’s investigation.
“This settlement provides relief to a large number of individual consumers who were subjected to unacceptable mortgage servicing practices. It also ensures appropriate reforms in PHH’s mortgage-servicing operations,” Hoffman said.
“As a result of an extensive investigation, the Division of Law and the Division of Consumer Affairs identified and, by this settlement, remedied questionable mortgage servicing practices that were impacting borrowers, many of whom were already down on their luck,” said Christopher S. Porrino, Director of the Division of Law. “This settlement will provide relief not only to borrowers in New Jersey, but across the country.”
In its investigation, the attorney general raised a number of concerns about potential violations of the New Jersey Consumer Fraud Act including: inaccurate statements about the time it would take to process loan modification requests; inaccurate statements to consumers about foreclosure proceedings and assessments of improper late fees and other fees.
As part of the settlement, PHH for two years will provide detailed information to the investigating committee, on a quarterly basis, about its activities related to mortgage modifications, foreclosure actions, and the resolution of borrower calls to PHH’s loss mitigation department.