PHH Mortgage Reaches $45 Million Settlement In Fraud Case: AG

Burlington County based PHH Mortgage has reached a $45 million settlement with the State of New Jersey to resolves allegations the it improperly serviced mortgage loans during a four-year period, authorities announced on Wednesday. The settlement covers 45 states and the District of Columbia.

PHH, the nation’s ninth largest non-bank residential mortgage servicer, was accused of improperly servicing mortgage loans from Jan. 1, 2009, through Dec. 31, 2012, according to Attorney General Christopher S. Porrino. The agreement includes $30.4 million in payments to borrowers, plus additional payments to 12 state Attorneys General who lead the investigation and negotiations, and a separate $8.8 million payment to state mortgage regulators. The New Jersey State Attorney General will receive $160,000.

Borrowers who were subjected to PHH foreclosures during the eligible period will qualify for a minimum $840 payment. Borrowers who faced foreclosures that the Mount Laurel company initiated during the eligible period, but did not lose their homes, will qualify for a minimum $285 payment, Porrino said.

In New Jersey, PHH is expected to make about $746,925 in direct payments to harmed borrowers, Porrino said. This includes more than 280 foreclosed borrowers who are eligible for the minimum payment of $840, and more than 1,700 borrowers who are eligible for the minimum payment of $285. Those who are eligible for payments under this agreement will be notified, Porrino said.

“This settlement holds PHH accountable for harm suffered by a significant number of borrowers in New Jersey and across the nation as a result of improper mortgage servicing,” Porrino said. “The agreement requires new servicing standards to help ensure that PHH doesn’t repeat the kind of conduct that led to its questionable mortgage practices, and to provide financial relief to aggrieved homeowners. We remain committed to ensuring that companies who loan money to New Jersey homeowners do so in a manner that is transparent and fair.”

“This settlement demonstrates a core responsibility of state regulators: to protect consumers from bad actors and bad business practices,” Department of Banking and Insurance Commissioner Richard J. Badolato said. “With this settlement, we are saying that states will not tolerate mortgage services that harm consumers by failing to process mortgage payments according to the law. These corrective actions help ensure that PHH’s future activity in processing loan payments is timely and accurate.”

Under the agreement, PHH must adhere to comprehensive mortgage servicing standards, conduct audits, and provide audit results to a committee of states. PHH is not released from liability for conduct that occurred beginning in 2013. In December of that year, the state reached a $6.25 million settlement with PHH that resolved the state’s own investigation into allegations that PHH misled financially struggling homeowners who sought loan modifications or other help to avoid mortgage delinquency or foreclosure.

Under that settlement, about 2,000 borrowers in New Jersey and across the country whose loans were serviced by PHH received about $3.61 million in restitution. Any PHH borrower who received restitution as part of the company’s 2013 settlement with New Jersey will not be among those borrowers eligible to receive payments as part of the multi-state agreement announced on Wednesday.

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