California fines Movement Mortgage for servicing violations
Movement Mortgage will pay $1.1 million in penalties and customer refunds to settle charges by California regulators it serviced loans without a state license and for collecting unearned interest.
This action follows a $9.2 million settlement that Nationstar Mortgage, now doing business as Mr. Cooper, entered into with the California Department of Business Oversight on Dec. 4 for violating the state's per diem interest law and the failure to properly investigate consumer complaints.
Under California law, the borrower cannot be charged interest on a mortgage for more than one day between the time a loan is closed and funds disbursed from escrow. This is the second time since 2012 that California has cited Movement for violating this law.
The new violations were found in a Jan. 4, 2016 regulatory examination, the agreement between the DBO and Movement states.
Movement identified 1,347 loans made between Jan. 25, 2012 and July 17, 2016 where it charged excess interest to borrowers. But the DBO sampled 150 of those loans and ruled that significant refunds were still owed to borrowers.
The company will pay these borrowers refunds of more than $141,000. In 2012, Movement refunded $7,300 to 65 borrowers but did not pay any additional penalties.
Movement agreed to hire an independent auditor to review files from Aug. 1, 2014 through Nov. 30, 2017. In addition, the auditor will also examine loans originated starting Dec. 1, 2017 through Nov. 30, 2018 for violations of the per diem interest rule. Movement will be penalized $125 for each additional violation the auditor finds.
Under the consent order, the DBO agreed to approve Movement's loan servicer licensing application.
“We are pleased to resolve the per diem interest matter with the California Department of Business Oversight in order to prevent future errors from occurring. The state of California’s audit and our internal review resulted in preventative measures put in place to ensure compliance. We are also pleased to announce the state of California has agreed to approve Movement Mortgage’s residential mortgage loan servicing application as part of today’s settlement," said company spokesman Adam O'Daniel.
In the case of Nationstar, the settlement included more than $4 million it refunded under the DBO's direction, to 48,000 borrowers for per diem interest and recording fees. An additional 1,637 borrowers will receive refunds of $120 plus interest for an origination fee the DBO determined to be unlawful.
Nationstar also agreed to hire an independent auditor to review its origination business. It paid $4.8 million in penalties for the past violations and agreed to a fine of $250 for each additional violation the auditor finds.
"Nothing is more important than maintaining our customers' confidence and trust, and we apologize to our valued customers in California," said Chairman and CEO Jay Bray in a press release. "We are on a mission to reinvent the mortgage experience and keep the dream of homeownership alive, and we have been and will continue to be transparent and forthright in making things right with our customers."
Nationstar and Movement were the third and fourth servicers DBO has fined for violating the per diem interest law in the last 13 months.
In April, DBO fined United Shore Financial Services $1.4 million. PrimeLending was penalized $1.6 million in November 2016.