Press Release: U.S. Trustee Program Reaches Agreements With Three Mortgage Servicers Providing More Than $74 Million in Remed...
December 07 2020 - 10:59AM
Dow Jones News
U.S. Trustee Program Reaches Agreements With Three Mortgage
Servicers Providing More Than $74 Million in Remediation to
Homeowners in Bankruptcy
Agreements Address Past Systemic Bankruptcy Servicing Errors
Impacting Homeowners
WASHINGTON -- The Department of Justice's U.S. Trustee Program
(USTP) announced today that it has entered into national agreements
with three mortgage servicers to address past mortgage servicing
deficiencies impacting homeowners in bankruptcy. The agreements
with Nationstar Mortgage LLC (Nationstar), U.S. Bank National
Association (U.S. Bank), and PNC Bank NA (PNC) address
noncompliance with the Bankruptcy Code and Federal Rules of
Bankruptcy Procedure that impacted over 60,000 accounts of
borrowers in bankruptcy dating back to 2011 and resulted in payment
application errors; inaccurate, missing, and untimely bankruptcy
filings; and/or delayed escrow statements.
"Homeowners in bankruptcy are entitled to receive proper and
timely notices and to have their payments properly accounted for,
consistent with the Bankruptcy Code and Rules," said USTP Director
Cliff White. "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."
Collectively, the USTP's agreements with Nationstar and U.S.
Bank, and the letter of acknowledgement with PNC, provide over $74
million to remediate over 76,000 historical servicing errors
impacting borrowers in bankruptcy. The agreements also require the
servicers to implement improvements in their bankruptcy operations
to ensure that the errors do not recur. Most of the remediation and
corrective actions have already been taken by the servicers.
Historical Servicing Deficiencies
Nationstar, U.S. Bank, and PNC at times failed to (1) run annual
escrow analyses for borrowers in bankruptcy, (2) file timely and
accurate notices of changes to bankruptcy borrowers' ongoing
mortgage payments, (3) file timely and accurate notices of fees
assessed during borrowers' bankruptcy cases, and (4) provide an
accurate final accounting of the payments made by the borrower
during the bankruptcy case as required under the Bankruptcy Code
and Rules.
In addition to these deficient servicing practices, U.S. Bank
and PNC failed to accurately apply borrower payments in bankruptcy
cases. And U.S. Bank failed to file timely and accurate proofs of
claim in bankruptcy cases.
Monetary Remediation and Changes to Internal Procedures
The servicers have or will provide account credits and refunds
to impacted bankruptcy borrowers. Nationstar has provided more than
$40 million in credits and refunds. U.S. Bank has, or will, provide
at least $29 million in credits and refunds, and has waived
approximately $43 million in fees and charges across its mortgage
servicing portfolio, including for borrowers in bankruptcy. PNC
provided close to $5 million in credits and refunds, as well as
additional remediation in the form of lien releases and debt
forgiveness.
In addition to monetary and other remediation, Nationstar, U.S.
Bank, and PNC each made changes to their internal procedures to
prevent the recurrence of the deficient bankruptcy servicing
practices. These changes included enhancements to computer
platforms, improvements to vendor and employee training and
oversight, and implementation of quality control processes to
ensure the accuracy and timeliness of filings in bankruptcy cases
and escrow analyses for borrowers in bankruptcy.
No Effect on Non-Parties
These agreements do not affect the rights of any homeowner or
other third party, including other governmental agencies.
Bankruptcy borrowers with questions may contact the servicers
at:
Nationstar Mortgage LLC at 833-981-2112,
PNC Bank at 855-245-3814, and
U.S. Bank at 888-724-7362.
The agreements are posted at
https://www.justice.gov/ust/national-mortgage-settlements.
The USTP is the component of the Justice Department that
protects the integrity of the bankruptcy system by overseeing case
administration and litigating to enforce the bankruptcy laws. The
Program has 21 regions and 90 field office locations. Learn more
about the Program at: https://www.justice.gov/ust.
(END) Dow Jones Newswires
December 07, 2020 10:44 ET (15:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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