Wisconsin Joins $15.5 Million Settlement With Mortgage Servicer
Company Wrongly Charged Customers Force-Placed Insurance
MADISON, Wis. – The Wisconsin Department of Financial Institutions (DFI) today announced Wisconsin and 48 state financial agencies in 47 states have reached a $15.5 million settlement with one of the nation’s largest mortgage servicers for improperly imposing “force-placed” insurance costs on borrowers who already had active homeowners’ insurance policies.
Under the terms of the settlement, Fort Washington, Penn., based NewRez LLC (NMLS ID 3013), will pay a total of $15.5 million. The company worked with state regulators to self-identify and proactively remediate more than $4.5 million to the impacted borrowers, and it will pay nearly an additional $11 million for costs and penalties. NewRez will be required to implement and conduct enhanced monitoring for loans that have force-placed insurance. The company also must implement other actions to strengthen controls.
The settlement resolves an issue discovered in a multistate examination of NewRez that found the company had 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.
“This multistate enforcement action and settlement represent another success of networked supervision, where state regulators work together, sharing resources to complete comprehensive examinations and prioritize consumer protection,” said DFI Division of Banking Administrator Kim Swissdorf. “The DFI appreciates the efforts of the lead states and their dedication to ensuring consumers were not ultimately responsible for unnecessary and unwanted force-placed insurance.”
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 is usually significantly more costly than if a consumer secures their own insurance policy.
The District of Columbia led the enforcement team, with the assistance of Arkansas, Iowa, Massachusetts, and Montana. NewRez cooperated with the states in the settlement.
Wisconsin residents who have questions about the enforcement action should contact the DFI’s Mortgage Banking section by calling: (608) 261-7578 or emailing: DFIMortgageBanking@dfi.wisconsin.gov. Residents can also visit NMLS Consumer Access to verify that a company is licensed to do business in Wisconsin, and they may also view past enforcement actions.
NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.
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