In the latest of a string of cash settlements home lenders have paid the government in response to aggressive lending practice allegations, PHH Corp., Mount Laurel, N.J., says it has agreed to pay $75 million to the U.S Department of Justice to resolve government investigations into the home mortgage lenderâ€™s handling of loans backed by the federal Department of Housing and Urban Development, the Department of Veterans Affairs, and the Federal Housing Finance Agency in 2006-11.
In a brief statement, the company says it agreed to pay â€œwithout admitting liability, in order to avoid the distraction and expense of potential litigation.â€�
The government subpoenaed PHH in 2013 and the company said it has cooperated with investigators, adding a promise to comply with â€œhigh legal, regulatory, and ethical standards.â€�
Following the 2008 financial crisis, provoked by lenders making mortgagesÂ to borrowers who didnâ€™t pay them and selling the resulting bad loans to unwitting investors and agencies, the government has typically demanded companies accused of wrongdoing pay large civil cash settlements â€” ultimately funded by insurers and shareholders â€” without finding individuals responsible.
PHH has reported losses in each of the past four years. Shares closed slightly up at $13.88.
The stock has lately traded around $13 a share, down from more than $25 in 2014-15. Since 2014 the company has replaced former CEO James Messina and other top managers, and sold off a string of mortgage assets and its former vehicle fleet management businesses, cutting revenues by more than two-thirds.
PHH said it added $13 million to its â€œlegal and regulatory reservesâ€� last Spring in expectation of the settlement.
PHH and its insurers in April agreed to pay $22 million to settle a lawsuit by customers who said they were overcharged. In 2013, the company agreed to pay more than $6 million in restitution and penalties to New Jersey customers who state authorities say the company misled when they asked for loan modifications. But last year, the company won a victory when a federal court reversed more than $100 million in penalties the federal Consumer Finance Protection Bureau tried to levy against PHH for taking kickbacks from mortgage insurers. The case remainsÂ on appeal.
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