Acting Attorney General Announces $6.25 Million Settlement Resolving Consumer Fraud Act Allegations Against PHH Mortgage

TRENTON – December 3, 2013 – (RealEstateRama) — Acting Attorney General John J. Hoffman and Division of Law Director Christopher S. Porrino announced today that the State has entered into a $6.25 million settlement with PHH Mortgage Corporation that resolves allegations the company misled financially struggling homeowners who sought loan modifications or other help to avoid mortgage delinquency or foreclosure.

The settlement announced today includes $3.61 million in restitution for approximately 2,000 borrowers nationwide whose loans are serviced by PHH. For example, 44 borrowers whose homes were sold in sheriff’s sales while loan modifications were pending will receive $10,000 each. Payments to consumers will be made within 30 days of the settlement’s effective date. The remaining $2.64 million will be paid to the State. PHH will also adopt nationwide servicing standards set forth in the Consent Judgment.

PHH is the nation’s ninth-largest residential mortgage servicer, and the fourth largest non-bank residential mortgage servicer. Under terms of its settlement with the State, the company admits no wrongdoing or liability.

The State began its investigation into PHH in 2011, in response to borrower complaints. PHH cooperated in the State’s investigation.

“This settlement provides relief to a large number of individual consumers who were subjected to unacceptable mortgage servicing practices. It also ensures appropriate reforms in PHH’s mortgage-servicing operations,” said Acting Attorney General Hoffman.

Said Christopher S. Porrino, Director of the Division of Law, “As a result of an extensive investigation, the Division of Law and the Division of Consumer Affairs identified and, by this settlement, remedied questionable mortgage servicing practices that were impacting borrowers, many of whom were already down on their luck. This settlement will provide relief not only to borrowers in New Jersey, but across the country.”

The State’s investigation raised a number of concerns about potential violations of the New Jersey Consumer Fraud Act including: inaccurate statements about the time it would take to process loan modification requests; inaccurate statements to consumers about foreclosure proceedings and assessments of improper late fees and other fees.

As part of the settlement, PHH for two years will provide the State with detailed information, on a quarterly basis, about its activities related to, among other things, mortgage modifications, foreclosure actions, and the resolution of borrower calls to PHH’s loss mitigation department.

From the Division of Law’s Affirmative Civil Enforcement Practice Group, Assistant Attorneys General Kevin Jespersen and Brian McDonough, Deputy Attorney General Janine M. Matton, Special Deputy Attorneys General Nicholas Dolinsky and Steven Scutti and former Deputy Attorney General Lisa Kutlin represented the State. The investigation was handled by Supervising Investigator Jennifer Micco and Investigator Joseph Iasso from the Division of Consumer Affairs’ Office of Consumer Protection.

Consumers who believe they may be entitled to restitution should call the Division of Consumer Affairs at 973-504-6335.

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