Newrez to pay $400G to New Yorkers in mortgage settlement
Illustration showing the Newrez App on a smartphone. Credit: Newsday Illustration
New York homeowners are among those eligible for refunds from a national mortgage servicer, which improperly charged borrowers for insurance policies, the state's insurance regulator announced Wednesday.
Newrez, a Pennsylvania-based loan servicer, agreed to pay $15.5 million to regulators in 48 states who said it improperly imposed forced-place insurance policies on homeowners who had active policies of their own.
Forced-place insurance is a type of policy lenders buy on borrowers' behalf if they don't maintain adequate coverage required by their mortgage. But it is often significantly more expensive than a typical insurance policy, the state Department of Financial Services said.
Newrez agreed to pay about $409,000 to New York customers and a roughly $602,000 penalty to the state Department of Financial Services. Nationwide, the loan servicer will pay about $4.5 million to about 4,200 borrowers.
DFS, the state's insurance regulator, said New York customers have received refunds. Homeowners who believe the company improperly charged them for forced-place insurance can file a complaint online at www.dfs.ny.gov/complaint or call 800-342-3736.
"The department is committed to protecting consumers and holding institutions accountable for their responsibilities to New Yorkers," Kaitlin Asrow, the department's acting superintendent, said in a statement.
The settlement reflected a multi-state examination of Newrez's conduct from November 2020 to October 2021.
It requires Newrez to create new policies to monitor loans with forced-place insurance.
Newrez neither admitted nor denied the allegations in the settlement. A spokesman for the company said it cooperated with the investigation and has addressed regulators' concerns.
"We remain committed to serving our homeowners and partners with the high standards they expect," the company said in an emailed statement to Newsday.
Loan servicers are required by law to give borrowers at least 45 days' notice before they impose a forced-place policy on a homeowner, according to a guide published by personal finance website NerdWallet.
Homeowners who must get forced-place insurance should make those payments, according to the guide, but shop for a new insurance policy of their own. Once that new policy is obtained, they should contact their mortgage servicer to cancel the forced-place insurance policy.
Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.
