- Division of Banks
- Office of Consumer Affairs and Business Regulation
Media Contact for Division of Banks Announces $44 Million Joint Settlement Over Improper Loan Serving Practices at PHH Mortgage
Chris Goetcheus, Communications Director
Boston, MA — The Massachusetts Division of Banks (Division) today announced a joint settlement was reached against PHH Mortgage Corporation for significant deficiencies in mortgage loan servicing. The agreement, reached between the Division, financial regulators of 46 other states and 49 attorneys general, requires corrective actions by PHH which includes consumer restitution of $31 Million, and a penalty of $8.8 Million to be distributed among the state regulators.
The settlement agreement is the result of a multi-state examination, led by the Division and coordinated by the Conference of State Bank Supervisors, to investigate the loan servicing practices at PHH Mortgage Corporation. The Division led an examination team that included the Arizona Department of Financial Institutions, Florida Department of Financial Regulation, Georgia Department of Financial Institutions, Louisiana Office of Financial Institutions, and the New York Department of Financial Services. The exam focused on loan servicing activities over a three-year period of January 1, 2009 to December 31, 2012.
“This company has caused considerable financial harm to many Massachusetts consumers,” said John Chapman, Undersecretary of the Office of Consumer Affairs and Business Regulation. “The Division worked diligently to ensure that all consumers affected by this behavior have been reimbursed and that appropriate corrective action is taken.”
“This multi-state settlement for improper loan servicing practices shows the collaborative nature of the state regulatory system. The Division, along with its state partners joined forces to ensure a safe and sound loan servicing industry and protect consumers across the country,” said Massachusetts Commissioner of Banks Terence McGinnis. “This examination aimed to determine the company’s compliance with applicable law, and the discovery of numerous violations of law and inadequate controls necessitated appropriate consumer remedies and a significant penalty.”
Highlights of the agreement include:
- Provides $31 Million in cash payments for up to 52,000 borrowers who lost their homes to foreclosure from January 1, 2009 to December 31, 2012, or who were in the foreclosure process during that period,
- Mandates that PHH submit an administrative penalty of $8.8 million to state regulators,
- Establishes a set of loan servicing standards the company must follow going forward.
The Division has received a $325,000 administrative penalty. Reimbursements to approximately 1,000 Massachusetts residents will range depending on individual consumer claims.
Please refer to the Division of Banks website at www.mass.gov/dob for additional information including the rules governing loan servicing, instructions on how to file a complaint, and information relative to the license application requirements. Please visit the Division’s Consumer Money Matters webpage for tips to protect consumers from unlawful lending practices.
The Division of Banks is an agency within the Office of Consumer Affairs and Business Regulation which oversees state-chartered banks and credit unions, sales finance companies, check sellers, debt collectors, foreign transmittal agencies, mortgage lenders and brokers. For more information visit the Division’s website at www.mass.gov/dob or contact the Division of Bank’s Consumer Hotline at 1-800-495-BANK (2265). For a complete list of recent Division enforcement actions and related fines, please click here.