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Politics & MoneyMortgage

Mr. Cooper, U.S. Bank and PNC Bank settle DOJ servicing case

Federal government said the trio of lenders violated bankruptcy regulations, affecting more than 76,000 borrowers

On the same day that Mr. Cooper announced it had reached a $91 million settlement over claims about it illegally foreclosing on borrowers, the Justice Department announced separate settlements over servicing errors with Mr. Cooper, 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 failure of mortgage servicers to comply with those requirements compromises the integrity of the bankruptcy system and the ability of homeowners to receive a fresh start,” said Cliff White, the director of DOJ’s U.S. Trustee Program, which reached the settlements.

The servicing noncompliance issues resulted in payment application errors; inaccurate, missing, and untimely bankruptcy filings; and/or delayed escrow statements, the DOJ said.

The settlement stipulates that Mr. Cooper – known as Nationstar until 2017 – will pay affected borrowers more than $40 million (that sum includes nearly $23 million in remediation to borrowers that were party to the separate Consumer Finance Protection Bureau lawsuit).

Meanwhile, U.S. Bank is on the hook for $29 million in credits and refunds, according to the settlement. The bank also waived approximately $43 million in fees across its mortgage servicing portfolio, including for borrowers in bankruptcy. The bank said in a statement that it identified the issues in 2014 and took corrective actions a year later.

PNC Bank provided nearly $5 million in credits, refunds and debt forgiveness, the DOJ said in a statement Monday.

The agreements also require the servicers to implement improvements in their bankruptcy operations to ensure that the errors do not recur, the DOJ said.  Most of the remediation and corrective actions were already taken by the servicers. 

In all, Mr. Cooper, U.S. Bank and PNC were required to pay over $74 million to the bankrupt homeowners.

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