On January 3, a coalition of 49 state attorneys general announced a $45 million settlement with PHH Mortgage Corporation, which was accused of misconduct related to its servicing of single-family residential mortgages.

In announcing the settlement, state attorneys general from across the country touted their commitment to holding mortgage companies responsible for any misconduct that harms consumers. “We will remain committed to holding mortgage companies accountable for harms homeowners suffered from improper loan servicing, especially improper foreclosures,” said Virginia Attorney General Mark Herring. New York Attorney General Eric Schneiderman echoed this sentiment in stating, “The foreclosure crisis continues to devastate communities across New York. We have zero tolerance for the types of practices that helped create the crisis – and will hold mortgage companies to account.”

According to the complaint filed by the attorneys general, PHH:

  • Failed to timely and accurately apply borrower payments and failed to maintain accurate account statements;
  • Charged unauthorized fees for default-related services;
  • Threatened foreclosure and conveyed conflicting messages to borrowers engaged in loss mitigation;
  • Failed to properly respond to borrowers’ complaints and reasonable requests for information and assistance;
  • Failed to properly process borrowers’ applications for loan modifications;
  • Failed to properly oversee third-party vendors; and
  • Used incorrect, incomplete, or inadequate affidavits and other documents as part of foreclosure proceedings.

The settlement includes $31.4 million for borrowers, $5 million for attorneys’ fees and costs, and an $8.8 million penalty. It also requires PHH to adhere to comprehensive mortgage servicing standards and audit and compliance reporting requirements.