On February 5, 2016, the Department of Justice, the Department of Housing and Urban Development, the Consumer Financial Protection Bureau, and 49 state attorneys general and the District of Columbia’s attorney general announced a $470 million settlement with a national bank to address alleged mortgage origination, servicing, and foreclosure abuses. The terms of the settlement largely mirror the terms of the 2012 National Mortgage Settlement (NMS) with the five largest national mortgage loan servicers. Under the agreement, which will be filed as a consent judgment in District of Columbia federal court, the national bank must pay: $40.5 million in penalties to the settling federal parties, $59.3 million to “an escrow fund administered by the states to make payments to borrowers who lost their homes to foreclosure between 2008 and 2012,” and must provide $370 million in “consumer relief directly to borrowers and homeowners in the form of reducing the principal on mortgages for borrowers who are at risk of default, reducing mortgage interest rates, forgiving forbearance and other forms of relief.” The bank will also be required to implement new loan servicing and foreclosure standards outlined in the agreement. As with the NMS, compliance with the agreement will be overseen by an independent monitor. Relatedly, the bank also consented to a $131 million civil monetary penalty assessed by the Federal Reserve Board to resolve allegations of similar misconduct.
The post National Bank Will Pay $600 Million to Settle Federal and State Claims Addressing Loan Origination, Servicing, and Foreclosure Practices appeared first on Consumer Finance Insights (CFI).