Mount Laurel-based mortgage outsourcing company PHH Corp. has entered a $6.25 million settlement with the state resolving claims the company “misled financially struggling homeowners who sought loan modifications or other help to avoid mortgage delinquency or foreclosure,” according to an announcement today from acting state Attorney General John Hoffman.
"This settlement provides relief to a large number of individual consumers who were subjected to unacceptable mortgage servicing practices," Hoffman said in a release. "It also ensures appropriate reforms in PHH's mortgage-servicing operations."
The settlement requires no admission of wrongdoing or liability. It consists of $3.62 million in restitution for more than 2,000 borrowers across the country whose loans were serviced by PHH. An additional $2.63 million will go to the state.
As part of the settlement, the company must also adopt "nationwide servicing standards set forth in the Consent Judgment" and will be required for two years to offer the state detailed quarterly information regarding its activities related to mortgage modifications, foreclosures and borrower calls to the company's loss mitigation department.
The state's investigation into PHH first began in 2011 following borrower complaints.
"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," division director Christopher Porrino said in the release. "This settlement will provide relief not only to borrowers in New Jersey, but across the country."
According to the state, PHH is the ninth-largest residential mortgage servicer and the fourth-largest non-bank residential mortgage servicer in the country.