Key facts
- Newrez will pay $15.5 million to settle claims of improperly charging for lender-placed insurance.
- The settlement includes $9.9 million in administrative penalties and $4.51 million in consumer relief.
- The multistate examination covered mortgage servicing activities from November 2020 to October 2021.
- Regulators found instances of noncompliance with RESPA and Regulation X.
- Newrez must conduct a self-audit and refund any improperly charged lender-placed insurance premiums.
- The company must provide quarterly updates on remediation efforts and implement enhanced servicing standards.
Newrez has agreed to a $15.5 million settlement to resolve a multistate examination that found the mortgage servicer improperly charged some borrowers for lender-placed insurance. The settlement, reached with regulators in 46 states and the District of Columbia, includes $9.9 million in administrative penalties, $1.09 million in administrative costs, and $4.51 million in consumer relief that Newrez has already paid.
The New York State Department of Financial Services announced that Newrez has returned $409,026 to affected New York borrowers and will pay a $602,226 penalty. Acting Superintendent Kaitlin Asrow stated the department is committed to protecting consumers and holding institutions accountable.
The examination, which began in January 2022, reviewed Newrez's mortgage servicing activities from November 1, 2020, through October 31, 2021. Regulators identified instances where Newrez did not comply with the Real Estate Settlement Procedures Act (RESPA) and Regulation X requirements concerning lender-placed insurance. These practices resulted in approximately $4.5 million in consumer harm, which Newrez has reportedly remediated.
As part of the agreement, Newrez will conduct an additional self-audit of lender-placed insurance fees for newly boarded loans in participating states. If the audit reveals improperly placed insurance, Newrez must refund the full amount paid by affected borrowers. The company is also required to provide quarterly updates on its remediation efforts and implement enhanced servicing standards, including monthly testing of newly boarded loans with lender-placed insurance for one year.