NYDFS Squeezes $17 Million In Fines Out Of Nationstar aka Mr Cooper For Violating New York Finance Laws

The New York Department of Financial Services has announced reached a $17 million settlement with Nationstar aka Mr Cooper.

The NYDFS accused the lender of violating a plethora of NYS financial laws.

Lending Website Housingwire stated:

The settlement shouldn’t come as a shock. Nationstar disclosed back in November that it was in negotiations with the NYDFS.

NYDFS stated the investigation uncovered numerous deficiencies and violations of the state’s banking laws. The violations occurred during Nationstar’s servicing and origination operations between 2011 and 2014.

NYDFS audits found evidence that Nationstar aka Mr Cooper failed to develop effective controls that kept pace with its growth. These issues caused damage to homeowners.

The settlement covers both Nationstar’s mortgage origination and servicing activities in the state.

NYDFS found the following problems at Nationstar aka Mr Cooper:

• The company’s document retention and document management processes showed significant flaws. In many instances, servicing files lacked documentation showing the company’s compliance with laws and regulations specifically designed to protect consumers, including loss mitigation correspondence, single point of contact notices, and annual privacy notices

• Nationstar’s controls related to its information technology systems were under-developed. For instance, though Nationstar outsourced its IT audit function to a third-party vendor, the company was unable to provide examiners with formal documentation detailing the nature and scope of the arrangement

Additionally, the NYDFS investigation found numerous “shortcomings” in Nationstar’s origination activities.

The investigation showed deficiencies in Nationstar’s document retention practices, including “origination files for New York borrowers that lacked fundamental documents, including Truth in Lending Act disclosures, property appraisals, and borrower income documents.”

The exam also found that in approximately 900 instances, Nationstar failed to fund mortgages for New York borrowers within the required timeframe, which led to various consequences for the borrowers.