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Newrez to pay $15.5M settlement over lender-placed insurance charges
The multistate deal covers lender-placed insurance practices tied to mortgage servicing from Nov. 1, 2020 to Oct. 31, 2021, with regulators finding RESPA and Regulation X noncompliance.
Newrez has agreed to a $15.5 million settlement with state mortgage regulators in 46 states and Washington, D.C. over lender-placed insurance practices, HousingWire reports. The resolution includes $9.9 million in administrative penalties and $4.51 million in consumer relief that Newrez has already paid, plus $1.09 million in administrative costs.
The New York State Department of Financial Services said Newrez returned $409,026 to affected New York borrowers and will pay a $602,226 penalty as part of the settlement, according to HousingWire. Acting Superintendent Kaitlin Asrow said the department is focused on consumer protection and accountability.
Regulators said an examination that began in January 2022 reviewed Newrez’s mortgage servicing activities from Nov. 1, 2020 through Oct. 31, 2021 and found instances of noncompliance with the Real Estate Settlement Procedures Act and Regulation X requirements governing lender-placed insurance.
The company said it is pleased to resolve the matter, noting the issues identified relate to earlier concerns that have been addressed, including remediation for affected borrowers. HousingWire also notes that force-placed or lender-placed insurance can be obtained when a borrower does not maintain required homeowners coverage, and it typically costs more than coverage the borrower arranges themselves.