Reports of irregularities in servicer foreclosure practices throughout the industry sparked the investigating of PHH Mortgage, according to a recent release from New York’s Department of Financial Services. After the investigation revealed discrepancies in the corporation’s mortgage origination and servicing practices, Governor Andrew M. Cuomo (D-New York) announced Wednesday that PHH will be fined $28 million and engage a third-party auditor.
"New Yorkers deserve peace of mind when shopping for a mortgage and this administration has zero tolerance for lenders who seek to cut corners and disregard the law at the expense of those seeking the American Dream in the Empire State," said Governor Cuomo. “We remain committed to rooting out unscrupulous practices in the mortgage industry and will continue to act vigorously to protect homeowners in every corner of New York."
The release says the investigation findings included:
- A lacking of formal and comprehensive policies and processes for executing foreclosure-related documents
- Inadequate monitoring of the operations of outside vendors it engaged to perform mortgage servicing related tasks, including foreclosure attorneys whose actions on behalf of the company had a direct impact on borrowers in financial distress
- The failure to establish adequate controls to prevent mortgage loan originators employed by one PHH entity from originating loans in another PHH entity’s name
- The failure to ensure that electronic signatures appearing on loan applications were those of the mortgage loan originators who actually took the application from the borrower
- The mortgage loan originator compensation plan’s failure to prevent directing borrowers to risky or unnecessarily high-cost loans