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 lender’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 “without admitting liability, in order to avoid the distraction and expense of potential litigation.”
The government subpoenaed PHH in 2013 and the company said it has cooperated with investigators, adding a promise to comply with “high legal, regulatory, and ethical standards.”
Following the 2008 financial crisis, provoked by lenders making mortgages to borrowers who didn’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 — ultimately funded by insurers and shareholders — 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 “legal and regulatory reserves” 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 remains on appeal.