[with 2021 updates] In the latest foreclosure fraud scandal to come to light, Nationstar Financial admitted that it halted foreclosure proceedings in 23 states after receiving multiple complaints from state authorities. The admission came to light in documents filed with the SEC. This admission comes at a time when Nationstar is trying to raise $1.4 billion in new capital.
With over 5000 employees nationwide, Nationstar is not some fly-by-night mortgage lender. As we have seen with Bank of America and Allied Home Mortgage, even the biggest “too big to jail” lenders are not immune from foreclosure fraud complaints.
The company claims it voluntarily stopped foreclosures after hearing complaints from 4 state attorneys general. Nationstar says that after an internal review it restarted the foreclosure procedures. Shutting down in 23 states is no small issue. That action had to cost the company millions in lost revenues. We wonder exactly how serious the complaints from regulators were to lead to such a drastic action. We also wonder about the findings of the company’s own “internal” review.
“A hated mortgage company tries again.” Those words were printed by the Dallas Morning News in 2018. Nationstar changed its name to Mr. Cooper in the hopes of escaping its horrible reputation. But it hasn’t work yet.
In 2020, the Consumer Financial Protection Bureau reported 1,244 complaints from consumers. Most were related to how the company processes – or doesn’t process – payments. Considering the company services 3 million homeowners nationwide, that doesn’t seem like many. Unfortunately, few people complain to the CFPB so those statistics are misleading.
Nationstar / Mr. Cooper Pays $73 Million Fine
On December 7, 2020, the CFPB settled a massive consumer fraud case against Nationstar Mortgage, LLC, which does business as Mr. Cooper. All fifty states settled their own complaints that same day with the company.
The government said Nationstar violated multiple Federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners. Nationstar is one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the United States. The settlement requires Nationstar to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It also requires Nationstar to pay a $1.5 million civil penalty to the CFPB.
Cash Whistleblower Rewards for Reporting Foreclosure Fraud
Foreclosure fraud is out of control nationwide. Unlike mortgage fraud which is wrongful or deceitful action by borrowers, foreclosure fraud occurs when a lender or servicer (Nationstar is both) fails to properly follow state and federal foreclosure guidelines. Examples can include the wrongful denial of a modification, failure to process payments, robosigning, forging important mortgage documents and by failing to prove that the party foreclosing has the standing to do so.
With mortgages being purchased, packaged, flipped and securitized, often the servicer filing the foreclosure can’t even prove that it owns the mortgage.
No one has formally charged Mr. Cooper with a crime or wrongdoing but in its own prospectus, the company admitted that it could not assure that future inquiries would not affect its ability to foreclose loans. We are looking for present or former employees of Nationstar / Mr. Cooper – or any lender – who have inside information about fraud involving government isnured mortgages. That include mortgages underwritten by the FHA, Fannie Mae, VE, the Department of Agriculture and Freddie Mac.
Under the federal false claims act, whistleblowers who report fraud by lenders and servicers involved in government backed mortgage loans are entitled to cash whistleblower rewards. These rewards are typically between 15% and 30% of whatever the government collects from wrongdoers.
After the 2008 mortgage crisis, rewards in the tens of millions of dollars were common. Although whistleblower rewards under the Trump administration remained robust (except for 2020 when COVID-19 shut down the courts), rewards in the lending space all but dried up. We expect that under the current administration they will return.
We welcome mortgage industry whistleblowers or homeowners with possible class actions to contact us. (Once again, we regret that we cannot assist homeowners with individual foreclosure defense. To learn more, visit our False Claims Act Qui Tam whistleblower page. Ready to see if you have a class action or qualify as a whistleblower? Contact us online or by email at )
Mahany Law – America’s Whistleblower Lawyers.
Need more information? Our Due Diligence blog has a search engine located in the upper right hand corner. For more information, just click the “foreclosure defense” tab or type in key words such as “foreclosure fraud” or wrongful foreclosure” in the search bar. We have many informative articles on our site.