| Date: | 10/09/2019 |
|---|---|
| Organization: | Division of Banks |
Whereas, from at least January 1, 2014 through and including February 28, 2019 (the "Relevant Period"), Kyanite Services, Inc. ("Kyanite") was the parent of Seterus, Inc. ("Seterus"), a Delaware corporation with a main office at 3039 Cornwallis Road, Building 203 #AA145, Research Triangle Park, North Carolina, through February 28, 2019;
Whereas, during the Relevant Period, Seterus was licensed as a mortgage servicer, mortgage lender servicer, debt collector, third party loan servicer, consumer loan company, and mortgage lender under the respective laws of several states, including Connecticut, Florida, Georgia, Massachusetts, Rhode Island, Washington and West Virginia ("Examining States");
Whereas, as of February 28, 2019, Seterus was sold, including all rights and ce1tain liabilities, to Nationstar Mortgage LLC d/b/a Mr. Cooper ("Purchaser") and its entire mortgage loan servicing portfolio was transferred to Purchaser.
Whereas, all references to Seterus during the Relevant Period mean the company as it existed until February 28, 2019, and references to Seterus thereafter, or of its current acknowledgement, obligation or commitment, refer to Kyanite;
Whereas, the mortgage regulators of the Examining States ("State Regulators") are members of the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, and have agreed to address enforcement concerns with Seterus in a collective and coordinated manner, working through the Multi-State Mortgage Committee ("MMC"), The State Regulators and Seterus are collectively referred to herein as the "Parties";
Whereas, from August 15, 2016 to August 26, 2016, the Examining States conducted a full-scope, mortgage -servicing examination into the activities of Seterus to determine its compliance with applicable State and Federal laws and regulations, financial condition, and the adequacy of policies and procedures and control and supervision of its licensed mortgage loan servicing operations;
Whereas, the examination review period was from April 1, 2014 to March 31, 2016. Selected financial information in the Report of Examination ("ROE") was updated through June 30, 2016, and additional operations and activity by Seterus through the execution of the Settlement Agreement and Consent Order ("Consent Order") were also considered;
Whereas, as a result of such examination, the State Regulators issued an ROE, dated August 16, 2016, alleging several findings of non-compliance by Seterus with industry standards and State and Federal laws and regulations;
Whereas, on October 16, 2017, Seterus provided a response to the ROE disputing certain purported findings as inaccurate or incorrect;
Whereas, the Parties acknowledge and agree that the State Regulators have legal authority to initiate administrative actions or judicial proceedings against Seterus based on the conduct within the ROE. However, the parties agree to resolve the alleged deficient conduct of Seterus identified within the ROE and provided herein through this Consent Order;
Whereas, the State Regulators allege that from April 2014 to June 2016, Seterus committed ce1tain violations of State and Federal laws and regulations as set forth in the ROE including failing to timely respond to qualified written requests in violation of Section 1024.36(d)(2) of the Real Estate Settlement Procedures Act, 12 CFR Part 1024 ("RESPA"), failing to exercise reasonable diligence in obtaining documents and information to complete loss mitigation applications in violation of Section I 024.41(b)(I) of RESPA, failing to timely acknowledge receipt of borrower loss mitigation applications in violation of Section 1024.4 l(b)(2)(i)(B) of RESPA, failing to include in notices a reasonable date by which borrowers should submit documents and information necessary to make loss mitigation applications complete in violation of Section 1024.4l(b)(2)(ii) of RESPA, failing to obtain audits pursuant to the Uniform Single Audit program for Mortgage Bankers as approved by the Mortgage Bankers Association of America, failing to file accurate reports, failing to provide access to books and records, failing to update a change to a Nationwide Multistate Licensing System and Registry ("NMLS") disclosure question within ten (10) days of such change, collecting a late fee that exceeded the contractual maximum amount allowed and failing to implement a compliance management system and formal audit program to effectively manage the compliance and business risk of its consumer collections operations;
Whereas, Seterus, based upon an internal audit disclosed during the examination, further self-repotted to the Examining States that it (the below hereinafter referred to as "Additional Conduct"):
- improperly collected late fees in excess of Six Million Dollars ($6,000,000) from over fifty thousand (50,000) borrowers, from a period of time commencing in 2013, up to and including 2016; and
- identified issues with its loss mitigation application acknowledgement process and responsive letter sent in error (hereinafter the "L266 letter"), or with inaccuracies or other deficiencies in their L266 letters to consumers;
Whereas, Seterus continued to disclose to the Examining States results from its internal audit and has further represented that it had performed the following forms of remediation:
- distributed restitution in excess of Six Million Dollars ($6,000,000) as of the date of this Consent Order, further representing that all borrowers that were impacted by the improperly charged and collected late fees would be refunded in full;
- made enhancements to its L266 letter production process; and
- installed and/or enhanced the quality controls process for the L266 letters including, but not limited to, installing a population tracker, tracking corrections, enhancing review of documents for accuracy and periodically sampling letters for compliance.
Whereas, Seterus further represents that it is engaged in and remains in the process of negotiating the restitution and otherwise full remediation towards consumers adversely impacted by the improper and incorrect L266 letters and other issues involved with the loss mitigation application acknowledgement process, which customer remediation is set to be wholly addressed as part of a separate and distinct matter;
Whereas, the Examining States believe that the failure of Seterus to comply with provisions of the laws of the Examining States and applicable Federal laws constitutes grounds for administrative action, including, but not limited to, the imposition of administrative fines or civil penalties, up to suspension or revocation of a license or registration granted by an Examining State, specifically Seterus's mortgage servicer license (CT), mortgage lender servicer license (FL), mortgage lender license (GA), debt collector license (MA), debt collector registration and third party loan servicer license (RI), consumer loan company license (WA) and mortgage lender license (WV);
Whereas, the Parties acknowledge the possible consequences of formal administrative or judicial proceedings, and the risks and expenses involved in such proceedings, and Seterus voluntarily agrees to consent to the entry of the sanctions imposed below solely for the purpose of obviating the need for formal administrative and judicial proceedings concerning the allegations set fo1th herein and without admitting any of the allegations set forth herein;
Whereas, the Parties now desire to resolve the matters set forth herein;
Whereas, Seterus specifically assures the State Regulators that Seterus will not engage in the violations alleged herein in the future;
Whereas, Seterus and/or Purchaser has voluntarily surrendered Seterus' mortgage servicing or other applicable licenses in all states in which Seterus was engaged in mortgage servicing activities requiring licensure;
Whereas, Seterus has been advised that the acceptance of said licensure surrender by the Examining States is conditioned, in part, on the execution of this Consent Order;
Whereas, Seterus acknowledges that this Consent Order is a public record and is a reportable event for purposes of the regulatory disclosure questions on NMLS, as applicable;
Whereas, Seterus, through its execution of this Consent Order, voluntarily agrees to waive its procedural rights as they concern any aspect of this Consent Order, including a right to a notice and an opportunity for a hearing and/or judicial proceedings as they pertain to the allegations set forth herein, and voluntarily waives its right to seek judicial review or otherwise challenge or contest the validity of this Consent Order;
Whereas, Seterus voluntarily agrees to consent to the entry of the terms imposed herein without admitting any liability, fault or wrongdoing and solely for the purpose of resolving this matter and obviating the need for further formal administrative proceedings concerning the allegations in the Order and Notice and set forth herein;
And Whereas, Kyanite represents that, as the parent of Seterus during the Relevant Period, it has authority to enter into this Consent Order, and that the person signing this Consent Order on behalf of Kyanite is duly authorized to execute this Consent Order for conduct occurring prior to February 28, 2019.
Now therefore, by this Consent Order, having been negotiated by the Parties in order to resolve the issues identified herein without incurring the costs, inconvenience and delays associated with protracted administrative and judicial proceedings, the Examining States hereby order: