Kansas Joins $15.5 Million Settlement with Mortgage Servicer NewRez LLC
Topeka, KS – The Kansas Office of the State Bank Commissioner and 47 other state financial agencies have reached a settlement with mortgage servicer, NewRez LLC, for improperly imposing force-placed insurance costs on borrowers who already had active homeowners’ insurance policies.
NewRez improperly imposed force-placed insurance on more than 4,200 borrowers with active homeowners’ insurance policies, causing consumer harm in the sum of more than $4.5 million across the United States.
Under the terms of the multistate settlement, NewRez will pay a nationwide total of $15.5 million toward remediating impacted borrowers, investigative costs, and penalties. NewRez is also required to implement and conduct enhanced monitoring for loans that have force-placed insurance and must implement other actions to strengthen controls.
“Consumers trust mortgage servicers with the critical responsibility of managing their payments accurately and collecting only what is contractually owed. In a vital servicing process, homeowners should never bear the burden of unwarranted charges caused by servicing errors,” said Deputy Commissioner James Payne. “This joint settlement holds the company accountable, makes affected borrowers whole, and ensures future compliance standards are upheld.”
Force-placed insurance is often required when a homeowner’s policy is cancelled, delinquent or is insufficient in coverage and the borrower has failed to secure replacement coverage. If necessary, the lender, bank, or loan servicer may force the replacement coverage, which allows the lender to protect its financial interest in the property. This practice usually is significantly more costly than if a consumer secures their own insurance policy and often does not protect the consumer’s interest equally.
State regulators in the District of Columbia, Arkansas, Iowa, Massachusetts, and Montana led the multistate enforcement effort. The company cooperated with the states in the settlement.
Kansas residents who have questions about the settlement can visit the Office of the State Bank Commissioner’s website www.osbckansas.gov. Residents can also visit the NMLS Consumer Access website www.nmlsconsumeraccess.org to view information and verify that a company is licensed to do business in Kansas.
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