Mortgage Servicer Paying $15.5 Million Settlement Over ‘Force Placed’ Insurance Costs

One of the nation’s largest mortgage servicers is paying millions of dollars to settle charges it imposed insurance costs on borrowers who already had homeowners insurance policies.

Forty-eight state financial agencies reached a $15.5 million settlement with NewRez LLC for improperly imposing “force-placed” insurance costs.

A multistate examination found the company improperly imposed force-placed insurance on more than 4,200 borrowers with active homeowners policies, causing consumer harm in the sum of more than $4.5 million, according to the Conference of State Bank Supervisors, a national organization of financial regulators.

The settlement calls for the Fort Washington, Pennsylvania-based mortgage servicer to pay a total of $15.5 million. The company reportedly worked with state regulators to self-identify and remediate more than $4.5 million to the impacted borrowers, and it will pay nearly an additional $11 million for costs and penalties.

Additionally, NewRez must conduct enhanced monitoring for loans that have force-placed insurance along with other actions to strengthen controls.

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, according to the Conference of State Bank Supervisors.