United States v. PHH Mortgage Corp. SETTLEMENT …

United States v. PHH Mortgage Corp. (D.N.J.), Civil No. 19-cv-4767 SETTLEMENT AGREEMENT

BETWEEN THE UNITED STATES OF AMERICA AND PHH MORTGAGE CORPORATION I. INTRODUCTION

1. This Settlement Agreement ("Agreement") is entered into between the United States of America ("the United States"), through the Department of Justice, and PHH Mortgage Corporation ("PIM"), through its authorized representatives. The United States and PHH are referred to herein as the "Parties." II. RECITALS

2. This Agreement resolves the allegations contained in the United States' lawsuit, United States v. PHH Mortgage Corp., Civil No. 19-cv-4767, filed in the United States District Court for the District of New Jersey against PHH on February 6, 2019 (hereinafter "Civil Action").

3. The Civil Action alleges that PHH engaged in violations of the Servicemembers Civil Relief Act ("SCRA"), 50 U.S.C. ?? 3901-4043, by conducting foreclosures, without a court order or valid waiver of SCRA rights, of real property owned by SCRA-protected servicemembers.

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4. The United States alleges in the Civil Action that, between January 1, 2010 and April 4, 2012, PH11 initiated and completed six foreclosures, without court orders or valid waivers of SCRA rights, of real property owned by SCRA-protected servicemembers. The United States alleges that, at the time of the foreclosures, the individuals who owned the foreclosed properties were servicemembers who were in military service, as defined by 50 U.S.C. ? 3911(1) and (2), had completed a period of military service within the past year (or nine months for foreclosures before February 2, 2013), see 50 U.S.C. ? 3953(c), or were members of a reserve component who had been ordered to report for military service, as defined by 50 U.S.0 ? 3917(a).

5. PHH is a New Jersey corporation with a principal place of business at 1 Mortgage Way, Mount Laurel, New Jersey.

6. This Agreement resolves all DOJ claims related to alleged violations of Section 3953 of the SCRA by PHH, or any subsidiaries, predecessors, acquired companies, or successor entities, from January 1, 2010 to September 24, 2018 (the "Covered Conduct").

7. PHH has cooperated fully with the United States' investigation in this matter. During the course of the investigation, PHH has produced, among other things, a list of its non-judicial foreclosures nationwide

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covering the period from January 1, 2010 to September 24, 2018. PHH has also produced its policies and procedures related to the SCRA and has agreed to compensate each of the servicemembers in each of the six foreclosures identified by the DOJ, as set forth more fully below. 8. The Parties agree, and the United States believes that it is in the public's best interest, that the Civil Action should be resolved amicably and without further litigation. 9. To avoid the delay, uncertainty, inconvenience and expense of protracted litigation of the United States' claims, and in consideration of the mutual promises and obligations set forth below, the Parties agree and covenant to the following material terms and conditions:

III. STATEMENT OF CONSIDERATION 10. The Parties agree that, to avoid the time and expense of litigation, the

claims against PHI-I should be resolved without further proceedings or a trial. Therefore, the United States and PHH agree to this Settlement Agreement (the "Agreement"). This Agreement constitutes full resolution of the United States' claims against PHH related to the Covered Conduct. 11. In consideration of, and consistent with, the terms of this Agreement, the Parties will jointly move for dismissal of the lawsuit entitled United

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States v. PHH Mortgage Corp., Civil No. 19-cv-4767, as set forth in Paragraph 37. The Parties agree and acknowledge that this consideration is adequate and sufficient. 12. Subject to the exceptions in Paragraph 34 below, and conditioned upon PHH's compliance with this Agreement, the United States releases PHH and its successors from any civil claim the United States has for the Covered Conduct. 13. PHH enters into this Agreement solely for the purpose of resolving a dispute with the United States over the allegations that it violated SCRA and neither admits nor denies any wrongdoing, allegations or implications of fact, or violations of SCRA. This Agreement is made without any trial, adjudication, or finding of any issue of fact or law.

IV. TERMS AND CONDITIONS A. COMPLIANCE WITH THE SCRA AND SCRA POLICIES AND PROCEDURES 14. PHH has produced and the United States has reviewed PHH's mortgage foreclosure policies and procedures for compliance with Section 3953 of the SCRA, 50 U.S.C. ? 3953. No modifications to PHH's SCRA policies and procedures are required by this Agreement. 15. If, at any time during the term of this Agreement, PHH proposes to materially change its policies and procedures as they relate to

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compliance with the SCRA, it shall first provide a copy of the proposed changes to counsel for the United States.' If the United States does not deliver written objections to PHI-1 within thirty (30) calendar days of receiving the proposed changes, the changes may be implemented. If the United States objects to any part of PHH's changes, the Parties shall confer to resolve their differences. Any dispute as to the content of PHI-I's policies and procedures will be resolved pursuant to the provisions of Paragraphs 38-40.

B. TRAINING 16. Within thirty (30) calendar days of the execution of this agreement,

PHH shall provide to the United States the curriculum, instructions, and any written materials included in the training required by Paragraphs 17-18. The United States shall have thirty (30) calendar days from receipt of these documents to raise any objections to PHH's training materials, and, if it raises any, the Parties shall confer to resolve their

1 All materials required by this Agreement to be sent to counsel for the United States shall be

sent by private business carrier (non-USPS) delivery service addressed as follows: Chief, Housing & Civil Enforcement Section, Civil Rights Division, United States Department of Justice, 1800 G Street, N.W., Suite 7002, Washington, DC 20006, Attn: DJ 216-48-2. A copy of the materials should also be sent to: Chief, Civil Rights Unit, U.S. Attorney's Office, District of New Jersey. 970 Broad Street, Suite 700, Newark, NJ 07102. Correspondence shall also be sent via electronic mail to the U.S. Department of Justice, care of the undersigned counsel for the United States.

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differences. Any dispute as to the content of the training will be resolved pursuant to the provisions of Paragraphs 38-40. 17. Within forty-five (45) calendar days after PHH's training program is approved by the United States pursuant to Paragraph 16, PHEI shall provide SCRA compliance training to any employee who has not yet already received such training and who: (a) provides customer service to borrowers in connection with their residential mortgages, or (b) has significant involvement in foreclosure proceedings. PHH shall provide to each such covered employee: (a) training on the terms of the SCRA with respect to foreclosures; and (b) training on PHH's policies and procedures as they relate to the SCRA (both those referenced in Paragraph 14, and all others adopted by PHH) specific to the employee's responsibilities associated with that employee's position. 18. Thereafter, PHH shall provide annual SCRA training, with the same content as described in Paragraph 17, to covered employees with respect to their responsibilities and obligations under the SCRA and PHH's policies and procedures as they relate to the SCRA. 19. PUB shall secure a signed statement in the form attached as Appendix A from each covered employee at the training required by Paragraphs 16-18. In this signed statement, each covered employee shall

acknowledge that he or she has received, read, and understands the Agreement and P1-11-I's policies and procedures as they relate to the SCRA specific to the employee's responsibilities associated with the loan being serviced, has had the opportunity to have his or her questions about these documents answered, and agrees to abide by them. For the duration of this Agreement, copies of those signed statements shall be provided to the United States upon request. PHH shall also certify in writing to counsel for the United States that the covered employees successfully completed the training required by Paragraphs 16-18.

C. COMPENSATION 20. The United States has identified six nonjudicial foreclosures completed

by PHH between January 1, 2010 and April 4, 2012, that it alleges were conducted in violation of Section 3953 of the SCRA, 50 U.S.C. ? 3953. A list of such foreclosures has been provided to PHH by the United States. 21. For each of the six foreclosures identified pursuant to Paragraph 20, ME shall compensate the servicemember borrowers (i.e., any SCRAprotected individual(s) who signed the note with respect to a foreclosed

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property) who execute the Declaration at Appendix B and Release at Appendix C in the amount of $125,000.2 22. The United States will undertake efforts to locate and notify the six identified servicemembers, and to obtain a signed Declaration and Release from each servicemember. Within twenty-one (21) calendar days of notification by the United States that a Declaration and Release have been received, PHH shall deliver to counsel for the United States a check payable to the aggrieved person. 23. When counsel for the United States has received a check from PHH payable to an aggrieved person and a signed Declaration and Release and IRS Form W-9 from the aggrieved person, counsel for the United States shall deliver the check to the aggrieved person and the original, signed Declaration and Release and IRS Form W-9 to counsel for PHH. No aggrieved person shall be paid until he or she has signed and delivered a Declaration and Release and IRS Form W-9 to counsel for the United States.

2 PHH represents that it has reviewed publically available information and historical automated valuation model data for each of the foreclosures at issue and has determined that none of the foreclosed properties had any equity, as calculated by subtracting any amounts owed by the borrowers (i.e., outstanding principal, interest due or past due, and other amounts due or past due), any junior liens at the time of foreclosure, and any disbursements made to the servicemember or a third party other than a junior lien holder from the proceeds of the foreclosure.

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