National Mortgage Servicer Agrees to Pay $15.5M in Consent Order with State Regulators over Lender-Placed Insurance Charges

In response to adverse findings in a multi-state examination report, a national mortgage loan servicer has entered into a consent order with forty-seven state financial regulators, pursuant to which the servicer will pay $15.5 million in penalties, costs, and remediation and perform monthly monitoring of compliance with lender-placed insurance laws.

Following a multi-state examination, the District of Columbia and eight states issued a report finding that the servicer had violated RESPA and Regulation X’s provisions governing charges for lender-placed insurance.  Thereafter, the servicer worked with the state regulators to identify actions to improve its compliance function and to compensate affected borrowers.

To memorialize their efforts, the servicer and the examining regulators (along with most other states’ regulators) entered into a consent order requiring the servicer to pay a $9.9 million administrative penalty, $1,088,757.84 in administrative costs, and $4,511,242.16 in remediation to affected borrowers.  Additionally, the order requires the servicer to conduct monthly testing on a sample of loans with lender-placed insurance to ensure compliance with the agreed-upon standards.

The servicer, however, neither denied nor admitted that its conduct violated any law.