Ohio joins $15.5M settlement with mortgage servicer NewRez LLC
The Ohio Department of Commerce Division of Financial Institutions, along with 47 other state financial agencies, has 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 settlement terms, NewRez LLC of Fort Washington, Pa. (NMLS ID 3013), will pay a total of $15.5 million. The company worked with state regulators to self-identify and proactively return $4.5 million to impacted borrowers and will pay an additional $11 million in costs and penalties. NewRez will be required to strengthen controls and implement enhanced monitoring for loans involving force-placed insurance.
The settlement resolves issues identified in a multistate examination that found NewRez improperly imposed force-placed insurance on more than 4,200 borrowers nationwide who already held active homeowners’ insurance coverage, resulting in consumer harm totaling $4.5 million. Sixty-nine Ohio consumers have already been issued refunds totaling $38,680.31.
“Ohioans deserve a fair and transparent mortgage process,” Division of Financial Institutions Interim Superintendent Ingrid White said. “This settlement underscores our commitment to holding companies accountable and preventing practices that put homeowners at risk.”
Force-placed insurance is typically required when a homeowner’s insurance policy is canceled, delinquent, or insufficient in coverage and the borrower has not secured replacement coverage. In such cases, a lender or loan servicer may obtain insurance to protect its financial interest in the property. This type of coverage is often significantly more expensive than policies obtained directly by consumers.
The District of Columbia led the enforcement team, with assistance from Arkansas, Iowa, Massachusetts and Montana. NewRez cooperated with the states throughout the settlement process.
Ohioans with questions may contact the Division’s Office of Consumer Affairs at web.dfi@com.ohio.gov or call 614-728-8400. Residents can also visit NMLS Consumer Access to verify a company’s license status in Ohio and review past enforcement actions.