State Attorneys General and State Mortgage Regulators Reach Settlement with PHH Mortgage Corporation Over Loan Issues

The Delaware Department of Justice, 48 other state attorneys general, the District of Columbia and over 45 state mortgage regulators have reached a settlement with New Jersey-based mortgage lender and servicer PHH Mortgage Corporation over improper loan servicing. Approximately 123 Delawareans are eligible for a payment as a result of the settlement.

The settlement resolves allegations that PHH, the nation’s ninth largest non-bank residential mortgage servicer, improperly serviced mortgage loans from January 1, 2009 through December 31, 2012, including failing to properly apply or amortize payments, charging authorized fees for defaults, failing to maintain complete loan files, robosigning affidavits used in foreclosures, referring matters to foreclosure improperly, losing or failing to timely process loss mitigation applications and paperwork, and other actions. The agreement requires PHH to adhere to comprehensive mortgage servicing standards, to conduct audits, and to provide audit results to a committee of states. The settlement does not release PHH from liability for conduct that occurred beginning in 2013.

“The settlement holds PHH accountable for harms homeowners suffered from improper loan servicing and shows our continued dedication to this area,” Attorney General Matt Denn said. “The agreement requires new servicing standards to help ensure that PHH doesn’t repeat conduct that led to improper mortgage servicing, and to provide financial relief to aggrieved homeowners.”

Borrowers who were subjected to PHH foreclosures during the eligible period will qualify for a minimum $840 payment, and borrowers who faced foreclosures that PHH initiated during the eligible period, but did not lose their home, will receive a minimum $285 payment. A settlement administrator will contact eligible payment recipients, including those in Delaware, at a later date.

The settlement includes $31.4 million in payments to borrowers, plus administrative penalties paid to state mortgage regulators (Delaware’s $159,000 went to the state General Fund), and additional payments to the 12 state attorneys general who led the investigation and negotiations.

Deputy Attorney General Gillian Andrews handled the matter on behalf of the Delaware DOJ Consumer Protection Unit.

Delaware Borrowers To Benefit From National Settlement With HSBC To Address Mortgage Loan Abuses

Agreement to provide certain Delaware borrowers with loan modifications; foreclosed HSBC loans may be eligible for payments for past abuse

A state-federal settlement with mortgage lender and servicer HSBC will provide direct payments to Delaware borrowers for past foreclosure abuses, loan modifications and other relief for borrowers in need of assistance, rigorous mortgage servicing standards, and grants oversight authority to an independent monitor.

Attorney General Matt Denn joined the federal government and other state attorneys general today in announcing the settlement with HSBC to address mortgage origination, servicing, and foreclosure abuses.

The settlement includes Delaware and 48 other states, the District of Columbia, the U.S. Department of Justice (DOJ), the U.S. Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB).

“This settlement provides relief to previous and current Delaware borrowers and compels HSBC to treat its borrowers much more fairly in the future,” Attorney General Matt Denn said. “This company will have to change its practices and raise its standards for how it treats consumers, as other companies have through others settlements in recent years. The irresponsible practices of the mortgage industry that led to the housing crisis and recession are continuing to change as a result of actions like these.”

Loan Modifications and Payments to Borrowers

The HSBC agreement requires the company to provide eligible Delaware borrowers with loan modifications or other relief. The modifications, which HSBC chooses through an extensive list of options, include principal reductions and refinancing for underwater mortgages. HSBC decides how many loans and which loans to modify, but must meet certain minimum targets. Because HSBC receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.

Approximately 240 eligible Delaware borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from a national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims.

Eligible borrowers will be contacted about how to qualify for payments.

Mortgage Servicing Standards

The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.

The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.

The settlement’s consumer protections and standards include:
• Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
• Restricting foreclosure while the homeowner is being considered for a loan modification;
• Procedures and timelines for reviewing loan modification applications;
• Giving homeowners the right to appeal denials;
• Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Independent Monitor
The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee HSBC agreement compliance for one year. Smith served as the North Carolina Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of the servicing standards required by the agreement; impose penalties of up to $1 million per violation (or up to $5 million for certain repeat violations); and issue public reports that identify whether HSBC complied or fell short of the standards imposed by the settlement.

Additional Terms
The agreement resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by HSBC, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.

HSBC Agreement Closely Mirrors National Mortgage Settlement
The agreement’s mortgage servicing terms largely mirrors the 2012 National Mortgage Settlement (NMS) reached in February of 2012 between the federal government, 49 state attorneys general, including Delaware, and the five largest national mortgage servicers. That agreement provided consumers nationwide with more than $50 billion in direct relief, created new servicing standards, and implemented independent oversight. A subsequent state-federal agreement with SunTrust Mortgage Inc. worth nearly $1 billion was announced in June of 2014.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia.

The HSBC settlement regarding mortgage loan activities is separate and distinct from the settlement reached with some banks over securities related activities. There is no direct payment to the State of Delaware in the settlement announced Friday; all relief in Delaware is directed to consumers.

Applications Now Being Accepted for Statewide Grant program Aimed At Revitalizing Neighborhoods

$1 million available through Neighborhood Building Blocks Fund, including up to $350,000 in planning grants to local governments

DOVER – A fund created to help strengthen neighborhoods throughout Delaware hit hardest by the 2008 financial crisis is now up and running.

The Neighborhood Building Blocks Fund was provided initial funding of $1 million from a settlement that Attorney General Beau Biden secured with JPMorgan Chase & Co. related to the housing crisis. The funding was authorized by the General Assembly in June. The fund is overseen by a board consisting of representatives from the Delaware Economic Development Office, the Delaware Department of Justice, the Delaware State Housing Authority, the Office of State Planning Coordination and the Delaware Community Foundation.

The Neighborhood Building Blocks Board invites neighborhood revitalization programs, neighborhood associations, community groups, law enforcement, local governments and other stakeholders to apply for grants from the fund that support crime reduction, neighborhood revitalization, and economic development programs statewide.

“The Neighborhood Building Blocks Board will put this money to work, strengthening Delaware’s communities,” said Attorney General Biden, who has secured more than $185 million for Delaware from financial institutions in mortgage crisis settlements since 2012. “We know that stronger communities are safer and are better places to work, live and raise a family. This is an innovative program to help neighborhoods that were hit hardest by the housing crisis rebuild themselves.”

Of the allocated funds, up to $350,000 has been designated to support local governments in developing strategic and other plans focusing on economic development, crime reduction, residential development or other revitalization efforts. Of that $350,000, priority will be given to requests by cities, towns, and unincorporated areas for reimbursement of the costs of generating applications for Downtown Development District designation.

The public is invited to attend an informational session regarding the Neighborhood Building Blocks Fund on Thursday, January 8, 2015 at 2 p.m. in the auditorium at the Delaware Department of Natural Resources and Environmental Control, 89 Kings Highway SW, Dover.

Economic development is a key facet of the Neighborhood Building Blocks Program, as some Delaware communities have not yet returned to full strength from losses suffered during the recession.

“While employment numbers and job figures show that Delaware is back to prerecession employment levels, we are aware of areas that have not made it all the way back. Until all of its communities have recovered, Delaware will not be satisfied,” said Alan Levin, Director of the Delaware Economic Development Office. “The funds, under the guidance of the Neighborhood Building Blocks Board, will target the specific needs of each of those communities.”

The Neighborhood Building Blocks Fund will particularly focus on supporting programs in and around Downtown Development Districts and work in conjunction with the Department of Justice’s Crime Strategies Unit. Attorney General Biden created the Crime Strategies Unit, using additional funds from the settlement with JPMorgan Chase & Co., to improve intergovernmental coordination, improve community outreach and implement cutting-edge crime-reduction strategies statewide.

Neighborhood Building Blocks Board member Fred Sears said his role as President and Chief Executive Officer of the Delaware Community Foundation has made him keenly aware of the many challenges facing Delaware’s cities and towns.

“The Neighborhood Building Blocks Fund is a welcome resource to these communities that are operating on very tight budgets,” Sears said. “These funds will provide an incentive to create programs and development projects that should provide long term benefits for the people who live and work in these communities.”

The application process is designed to identify the most effective proposals for building stable communities and neighborhoods, and to fund those proposals in an effort to improve neighborhoods throughout the State.

“We are particularly excited about the new Neighborhood Building Blocks Fund because it compliments very well other key neighborhood revitalization efforts being implemented, including the DSHA Strong Neighborhoods Fund and Governor Markell’s Downtown Development District initiative,” said Anas Ben Addi, Director of the Delaware State Housing Authority. “There are many neighborhoods across the state that need redevelopment, but it will take a good plan and all of us – housing, law enforcement, private investors, faith-based groups, and, of course, the community – working together to get the job done.”

The Delaware General Assembly approved the initial Neighborhood Building Blocks funding in the Fiscal Year 2015 budget bill.

Sen. Harris B. McDowell III, D-Wilmington, co-chairman of the budget-writing Joint Finance Committee, applauded the use of money appropriated by the General Assembly to assist community development through cooperative efforts set up by the Attorney General, the Delaware State Housing Authority, JPMorgan Chase and other private sector financial institutions.

“The long-term vitality of our neighborhoods begins with civic engagement. When community leaders, homeowners, local governments and other stakeholders can come together with a path forward, it’s important they have the resources available to implement that vision,” Sen. McDowell said. “That’s what these funds will do. We’re making great progress in Delaware, but our economy will be even stronger when our hardest-hit communities can join in the recovery.”

Guidelines and the application for grants can be found on the Neighborhood Building Blocks Fundpage ( on the Delaware Economic Development Office’s website, Completed applications should be submitted via email at ( or through regular mail at the following address:

The Neighborhood Building Blocks Fund (NBBF)

c/o The Delaware Economic Development Office

820 North French Street

Tenth Floor

Wilmington, DE 19801

Please note that applicants may designate certain information as law enforcement sensitive, proprietary or otherwise confidential pursuant to the Delaware Freedom of Information Act (“FOIA”). Consistent with FOIA, DEDO and any Reviewing Agency will take such measures as are appropriate to limit disclosure of such information.

Delaware Consumers Will Soon Receive Payment From Ocwen Mortgage Settlement

Part of settlement terms Attorney General Biden secured calls for Delawareans who had mortgages serviced by Ocwen and lost home to foreclosure to receive payment


WILMINGTON – First State consumers who are eligible for a direct payment as part of the $7 million settlement Attorney General Beau Biden reached with Ocwen Financial should soon be receiving their checks, Biden announced Monday.


More than 200 Delawareans will receive checks of approximately $1,200 under the settlement, which Biden, 48 other attorneys general and the federal government reached with Ocwen in December 2013 to resolve allegations that the financial institution’s misconduct contributed to the housing crisis. The settlement holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to homeowners, and stops future fraud and abuse.


The payments are going to Delawareans who had mortgages serviced through Ocwen or one of two subsidiaries and lost their homes to foreclosure between January 2009 and December 2013. The checks should all be in the mail by Tuesday. In addition to these direct payments, Ocwen was also required to provide financial benefits, such as principal reductions, to homeowners who still hold an Ocwen mortgage as well as make significant customer service improvements.


“Our financial system only works when everyone plays by the rules and there must be accountability when the rules are broken,” said Biden, who has secured more than $185 million for Delaware in settlements with banks whose conduct helped cause the housing crisis. “The funds we have secured in these settlements provide financial benefits to consumers as well as resources to strengthen communities harmed during the housing crisis.”


Ocwen specialized in servicing high-risk mortgage loans. Ocwen’s misconduct resulted in premature and unauthorized foreclosures, violations of homeowners’ rights and protections, and the use of false and deceptive documents and affidavits, including robo-signing.


Ocwen customers eligible for the payments should already have been contacted. Consumers can contact Ocwen at 1-800-337-6695 or  Borrowers having difficulty contacting Ocwen or who have questions should contact Biden’s office by calling the Attorney General’s Office of Foreclosure Prevention at 1-800-220-5424.

Biden’s insistence on accountability for mortgage crisis leads to $45 million for Delaware, millions more in financial benefits for Delawareans from Bank of America

Biden has now secured at least $180 million from banks for conduct that caused mortgage crisis; Delaware is one of four states to participate directly in past three major settlements

Wilmington – Bank of America has agreed to pay $45 million to Delaware and provide significant financial benefits to Delaware homeowners to settle allegations that it misled investors about the riskiness of mortgage-backed securities, Attorney General Beau Biden announced today.

The settlement is the latest development in Biden’s wide-ranging effort to ensure accountability by financial institutions responsible for the mortgage crisis. Including the $45 million that Bank of America will pay, Biden has secured at least $180 million in mortgage-related settlements.

Delaware’s settlement with Bank of America is part of a $16.7 billion settlement announced Thursday between the bank, the United States Department of Justice, Delaware and five other states – California, Illinois, Kentucky, Maryland, and New York.

“Our financial system only works when everyone plays by the rules, and there must be accountability when those rules are broken,” said Biden, who secured nearly $20 million in a settlement with JPMorgan Chase in November and $17 million from Citigroup in a settlement last month.

“The mortgage crisis wrecked our economy and devastated families and neighborhoods throughout Delaware and the nation,” Biden said. “We cannot allow the mortgage crisis to be a man-made disaster for which there is no accountability. The funds we have secured in these settlements are being put to work helping thousands of Delaware families avoid foreclosure, strengthening communities hit hard by the fallout from the housing crisis, holding banks accountable and reimbursing government losses. Our work is not done.”

Delaware’s settlement comes in three parts:

  • Bank of America will pay $31.6 million to the State. As with previous settlements, the funds must be used to remediate the harm Delaware’s communities suffered as a result of the housing crisis;
  • Bank of America will pay $13.4 million to reimburse government entities for losses suffered on Bank of America, Merrill Lynch and Countrywide investments that were wrongly marketed as being low-risk; and
  • Bank of America will make direct financial benefits, such as mortgage modifications and forgiveness of second mortgages, available to homeowners. Under the terms of the settlement, Bank of America must provide at least $150 million in benefits to consumers in Delaware, Maryland and Kentucky (the three smallest states participating in the settlement). Homeowners with mortgages serviced by Bank of America may be eligible for these benefits. To determine eligibility, homeowners should contact Bank of America at 877-488-7814 or Biden’s Office of Foreclosure Prevention at 1-800-220-5424.

This settlement with Bank of America, along with the two recent settlements with JPMorgan Chase and Citigroup, resolves allegation centering on the bank’s bundling and sale of mortgages to investors. These investments – bought by pension funds, mutual funds and other investors – were represented as low risk but were in fact much riskier than advertised. The resulting losses were disastrous for the economy.

Delaware has become a national leader among states in pursuing accountability for actions that contributed to the housing crisis during Biden’s tenure. Biden is a member of the U.S. Department of Justice’s Residential Mortgage-Backed Securities Working Group, and Delaware is one of just four states (along with California, New York and Illinois) to be part of that group’s past three major mortgage-crisis settlements with some of the nation’s largest banks.

Delaware’s success in holding banks accountable has been possible due to Biden opening investigations into the conduct of financial institutions, the state’s strong enforcement laws, such as the Delaware False Claims and Reporting Act and the Delaware Securities Act, and Biden’s decision to direct a portion of prior settlement funds to pursue future enforcement initiatives.

Biden also played an important role in the February 2012 National Mortgage Settlement that as meant more than $75 million in financial benefits for Delaware homeowners, $11.7 million for the State and important new protections for military personnel and their families that Biden championed in negotiations with the nation’s five largest mortgage-servicing banks.

The Bank of America matter was handled for Delaware by Investor Protection Director Owen Lefkon, Deputy Attorney General Timothy Worthington and Fraud Division Director Matthew Lintner.