A mortgage banker agreed to pay a $5 million fine, following restitution payments of $7 million, to settle charges brought by the New York State Department of Financial Services ("DFS"). The charges included failure to develop required controls, keep records and file reports, obtain necessary authorization for certain activities and fund certain mortgage loans.
According to the Order, the DFS alleged that Nationstar Mortgage LLC ("Nationstar") failed to maintain the required servicing and origination operations under New York State Banking Law. DFS alleged that between 2011 and 2014, Nationstar failed to fund mortgage loans for borrowers within the required timeframe in approximately 900 instances. The DFS stated it had received numerous consumer complaints regarding payment processing errors and wrongfully ordered forced-place insurance for borrowers before the lapse of their voluntary hazard insurance policy. The DFS investigation also found instances of failure to obtain authorization for multiple domain names, recordkeeping and reporting and authorization to operate two branch locations.
In addition to the fine, Nationstar made over $7 million in restitution payments to New York borrowers for failing to fund loans and other related errors. Nationstar will also donate $5 million in residential real property or first-lien mortgages to non-profit organization(s).
Commentary / Steven Lofchie
The settlement of governmental enforcement actions by donation to nonprofit organizations ought to be closely scrutinized, no matter how nice a thing it appears to be. At a minimum, shouldn't there be a transparent process for determining the beneficiaries?
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