CFPB looking at Mr. Cooper after withdrawal errors

Mortgage servicer took out unauthorized mortgage payments due to vendor error

On Tuesday, the Consumer Financial Protection Bureau (CFPB) announced it was looking into a situation with mortgage servicer Mr. Cooper after the company made unauthorized withdrawals from borrower accounts over the weekend due to a vendor error.

“The CFPB is taking immediate action to understand and resolve the situation that has affected hundreds of thousands of consumers,” said CFPB acting director Dave Uejio. “The CFPB will use all appropriate tools at our disposal to help ensure harmed consumers receive relief. Consumers affected by the incident should monitor their accounts and may contact Mr. Cooper directly.”

Mr. Cooper on Monday announced that due to a payment processing issue, unauthorized mortgage payments were taken from a number of borrowers’ accounts on Saturday, April 24. The company pointed to an error in its electronic payments vendor – which it did not initially name – as the source of the incorrect transactions, with some payments being posted the same day, while others did not process until Monday.

After the CFPB issued its notice on Tuesday, Mr. Cooper pointed the finger at the vendor ACI Worldwide for having “inadvertently issued incorrect mortgage payment drafts while conducting a test of their system.”

In its initial public alert, Mr. Cooper said that because the issue occurred on Saturday, some transactions sat through the weekend, however, it expects the majority of customers’ account statuses to be up to date by Tuesday at the latest.

According to the alert, all inaccurate charges are being corrected, and any impacted customers will not be responsible for any fees or other negative financial impact they may have caused. The company said that they are currently working with borrowers to reimburse them if any form of fee does occur from the withdrawals.

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“We value the trust our customers place in us, and we sincerely apologize to those impacted. We take the processing of these transactions very seriously, and we will continue to work with the payments vendor to understand the root cause and ensure this issue does not happen again,” Mr. Cooper said in the alert.

The mortgage servicer reiterated that this was not the result of a hacking and no borrower bank accounts or accounts within Mr. Cooper’s system were compromised. 

Mr. Cooper did not disclose specifically which banks they were working with to reverse the incorrect charges, however, several heated borrowers took to social media after discovering the unauthorized withdrawals with the majority pointing to issues with JPMorgan Chase.

Several users on both Reddit and Twitter said they witnessed multiple payments were removed from their accounts that left them some of them thousands of dollars in the negative. One Reddit user said five payments were removed from his account on Saturday, totaling a whopping $10,000 in one go. Another user mentioned how they had made a lump sump payment on their previous bill that totaled $25,000, and reported that total (which was three of their regular payments) was pulled again on the weekend.

In December, Mr. Cooper settled with the CFPB for allegedly committing illegal foreclosures from Jan. 2012 to Jan. 2016 when the company operated under the title Nationstar. Mr. Cooper agreed to refund $90 million to the 115,000 customers affected and pay a civil penalty of more than $6.5 million.

The same day that settlement was released, the Justice Department announced separate settlements over servicing errors with Mr. Cooper alongside U.S. Bank and PNC Bank.

In all, the Justice Department said the three lenders didn’t comply with federal bankruptcy procedures, which affected a total of 76,000 accounts beginning in 2011. The settlement stipulates that Mr. Cooper – again Nationstar at the time – will pay affected borrowers more than $40 million.

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