Maybe I'm a little slow, but I don't understand the settlement entered into by the State of New Jersey and Mount Laurel-based PHH Corp., in which PHH will pay $6.25 million to resolve allegations that the firm misled financially struggling homeowners who wanted loan modifications to avoid mortgage delinquency or foreclosure.
As reported in the Philadelphia Business Journal (PBJ) by Jeff Blumenthal, the settlement includes $3.61 million in restitution for about 2,000 borrowers nationwide whose loans were serviced by PHH, the nation's ninth-largest residential mortgage servicer and fourth largest non-bank residential mortgage servicer. PHH admitted no wrongdoing or liability under the terms of the settlement.
"For example," the article stated, "state officials said 44 borrowers whose homes were sold in sheriff's sales while loan modifications were pending will receive $10,000 each. Payments to consumers will be made within 30 days of the settlement's effective date. The remaining $2.64 million will be paid to the state."
What I don't understand is why the homeowners will receive $10,000 in compensation for a lost home (hardly enough to pay rent for a year) while the State of New Jersey gets $2.64 million, or more than 40 percent of the settlement amount.
In the PBJ article, PHH said it "disputes many of the New Jersey Attorney General's findings and denies that there has been any violation of the New Jersey Consumer Fraud Act or any other laws. We believe the customer service issues in question were indicative of a complex time in the mortgage industry, not violations of the law."
What do you think?