Idaho joins $15.5M multistate settlement with mortgage servicer NewRez

The Idaho Department of Finance has joined 47 other states in a $15.5 million settlement with mortgage servicer NewRez, LLC, over allegations the company improperly charged borrowers for insurance they didn’t need.

NewRez, based in Fort Washington, Pennsylvania, is one of the nation’s largest mortgage servicers and does business in Idaho under the name Shellpoint Mortgage Servicing.

A multistate examination found NewRez had imposed “force-placed” insurance on more than 4,200 borrowers who already had active homeowners insurance policies, causing more than $4.5 million in consumer harm. Force-placed insurance is coverage a lender or servicer may add to a mortgage when a borrower’s own policy lapses, is canceled or falls short of required coverage, protecting the lender’s financial interest in the property. It typically costs significantly more than a policy a homeowner secures independently.

Under the settlement, NewRez worked with regulators to self-identify the problem and has already refunded more than $4.5 million to affected borrowers nationwide. The company will pay nearly $11 million more in costs and penalties and must implement enhanced monitoring of loans with force-placed insurance, along with other measures to strengthen its internal controls.

In Idaho, NewRez refunded $22,419.20 to 16 borrowers, an average of about $1,400 each. Idaho’s share of the settlement’s penalties and costs is $84,016.09.

“When a company falls short, we expect it to acknowledge the error and correct it. NewRez did so here. Our responsibility is to ensure Idaho borrowers do not bear that cost, and in this instance, they did not,” said Salvador Cruz, director of the Idaho Department of Finance.

Federal mortgage servicing rules require a servicer to notify a borrower in writing at least 45 days before charging for force-placed insurance, followed by a reminder at least 15 days before the charge is assessed. Borrowers who provide proof of existing coverage during that window should not be charged.

IDOF is urging Idaho homeowners to review escrow and monthly mortgage statements for unauthorized insurance charges, to send servicers written proof of coverage whenever a policy renews or changes, and to open all mail from servicers regarding insurance.

Affected borrowers have already been reimbursed and do not need to file a claim; there is no deadline or fee associated with the settlement. The department cautioned consumers to be wary of anyone offering to recover settlement funds for a fee.

The District of Columbia led the enforcement effort, with assistance from Arkansas, Iowa, Massachusetts and Montana. NewRez cooperated with the states throughout the settlement process.

Idaho residents with questions, or who believe they were charged for insurance they already had, can contact IDOF at 208-332-8000 or file a complaint at finance.idaho.gov/complaint-guidance. Consumers can also verify a company’s Idaho licensing status and view past enforcement actions at nmlsconsumeraccess.org.

The Idaho Department of Finance has regulated financial services in the state since 1905.

This story was written using artificial intelligence with human oversight.