NEW JERSEY JOINS $15.5 MILLION SETTLEMENT WITH MORTGAGE SERVICER

The following information was released by the New Jersey Department of Banking and Insurance:

New Jersey and 46 state financial agencies in 46 states have reached a $15.5 million settlement with one of the nation's largest mortgage servicers for improperly imposing "force-placed" insurance costs on borrowers who already had active homeowners insurance policies.

Under the terms of the settlement, Fort Washington, Penn., based NewRez LLC (NMLS ID 3013), will pay a total of $15.5 million. The company worked with state regulators to self-identify and proactively remediate more than $4.5 million to the impacted borrowers, and it will pay nearly an additional $11 million for costs and penalties. NewRez will be required to implement and conduct enhanced monitoring for loans that have force-placed insurance. The company also must implement other actions to strengthen controls.

The settlement resolves an issue discovered in a multistate examination of NewRez that found the company had improperly imposed "force-placed" insurance on more than 4,200 borrowers nationwide with active homeowners insurance policies, causing consumer harm in the sum of $4.5 million.

In New Jersey, there were 208 impacted borrowers, all of whom have received restitution to an amount totaling $225,783.08. The Settlement Agreement and Consent Order in this matter are now final and the penalty for participating states have been determined with New Jersey receiving a total of $518,296.09.

"This Department, in cooperation with our banking regulatory partners nationwide, takes consumer protection and enforcement of New Jersey mortgage servicing laws very seriously," said New Jersey Department of Banking and Insurance Acting Commissioner Susan Ochs. "This settlement demonstrates our commitment to ensuring that mortgage servicers follow the law and don't impose unnecessary costs onto New Jersey homeowners."

Force-placed insurance is often required when a homeowner's policy is cancelled, delinquent or is insufficient in coverage and the borrower has failed to secure replacement coverage. If necessary, the lender, bank, or loan servicer may force the replacement coverage, which allows the lender to protect its financial interest in the property. This practice usually is significantly more costly than if a consumer secures their own insurance policy.

The District of Columbia led the enforcement team, with the assistance of Arkansas, Iowa, Massachusetts, and Montana. NewRez cooperated with the states in the settlement.