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PHH reaches nationwide settlement over crisis-era mortgage servicing

PHH Corp. will pay $45 million as part of a nationwide settlement over mortgage servicing and foreclosure issues during the housing crisis, a group of nearly every state attorney general announced Wednesday.

The settlement requires PHH to adopt new servicing standards and provide monetary relief to affected borrowers, though the company counters it already currently uses said standards.

The settlement covers the company’s mortgage servicing practices, including foreclosure activities, between Jan. 1, 2009 and Dec. 31, 2012.

The settlement is between PHH and the Multi-State Mortgage Committee, including more than 45 state mortgage regulators, along with 49 state attorneys general, and the District of Columbia.

Every state took part in the settlement, with the exception of New Hampshire. It is unknown at this time why New Hampshire is not a party in the settlement. HousingWire contacted the New Hampshire Attorney General, and this article will be updated should the AG respond.

According to the complaint filed by the state attorneys general, PHH “threatened foreclosure and conveyed conflicting messages to certain borrowers engaged in loss mitigation.”

Per the office of Florida Attorney General Pam Bondi, PHH also allegedly charged unauthorized fees for default-related services.

According to Bondi’s office, the state AGs complaint alleged that PHH failed to:

  • Maintain adequate documentation to determine whether PHH had standing to foreclose
  • Appropriately respond to certain borrowers’ complaints and reasonable requests for information and assistance
  • Timely and accurately apply payments made by certain borrowers
  • Properly oversee third party vendors retained for servicing and foreclosure operations
  • Preserve accurate account statements
  • Adequately process borrowers’ applications for loan modifications

As part of the settlement, PHH will pay more than $30 million to borrowers who lost their homes to foreclosure or were referred for foreclosure during the time period in question.

PHH borrowers whose homes were lost in foreclosure during that period will qualify for a minimum $840 payment, while borrowers who faced foreclosures that PHH initiated, but did not lose their home, will receive a minimum $285 payment.

In total, the $45 million settlement includes $30.4 million in payments to borrowers, $1 million for claims administration, an additional $5 million to the lead states that headed up the investigation and negotiations, and a separate $8.8 million payment to state mortgage regulators.

In a statement, PHH said that it agreed to the settlement in order to move beyond “legacy” issues, but notes that it did not admit liability.

“We have agreed to resolve concerns raised by the MMC arising from its servicing examination conducted in 2010 and believe that settling this matter is in the best interest of PHH and its constituents,” the company said in a statement.

“Our decision to resolve this legacy matter under the terms of the settlement agreement and consent orders is not an admission of liability or that we violated any applicable laws, regulations or rules governing the conduct and operation of our servicing business during the relevant time frame,” the company continued.

“In fact, the servicing standards that we are required to adopt under the terms of the settlement are largely PHH’s servicing standards today,” the company added. “We have made and will continue to make the necessary enhancements in our operations to ensure we remain compliant and continue to serve our customers in a fair and appropriate manner.”

In a separate filing with the Securities and Exchange Commission, PHH noted that it expects the portion of the settlement amount representing payments made to borrowers to be tax deductible.

As part of the settlement, PHH will also implement a testing and reporting process to ensure compliance with the servicing standards established by the settlement, for a period of three years.

The company said that it does not expect to incur material costs in connection with the administration of the settlement terms, including in complying with the servicing standards.

A separate release from New York Attorney General Eric Schneiderman states that the settlement does not release PHH from liability for conduct that occurred beginning in 2013.

For the full text of the consent order, please visit

For the full text article, please visit 

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