SETTLEMENT AGREEMENT AND CONSENT ORDER

NATIONSTAR MORTGAGE LLC

WHEREAS, Nationstar Mortgage LLC d/b/a Mr. Cooper (“Nationstar”) is a Delaware limited liability company with headquarters located in Coppell, Texas and an assigned NMLS identifier number of 2119.

WHEREAS, the States of Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, Wyoming, the Commonwealths of Kentucky, Massachusetts, Pennsylvania, Puerto Rico, and Virginia, the Territory of the United States Virgin Islands, and the District of Columbia (individually, a “Participating State,” and collectively, the “Participating States”) have each agreed, through its respective state mortgage regulatory agency, to negotiate and enter into this Settlement Agreement and Consent Order (hereinafter referred to as the “Agreement” or “Order”).

WHEREAS, the state mortgage regulators of the Participating States (hereinafter referred to individually as a “State Mortgage Regulator,” and collectively as the “State Mortgage Regulators”) are respective members of the Conference of State Bank Supervisors (“CSBS”) and the American Association of Residential Mortgage Regulators (“AARMR”) and have agreed to address enforcement concerns with Nationstar in a collective and coordinated manner, working through the Multi-State Mortgage Committee (“MMC”). The State Mortgage Regulators and Nationstar are collectively referred to herein as the (“Parties.”)

WHEREAS, Nationstar is licensed as a mortgage broker, lender, and/or servicer under the respective laws of each Participating State.

WHEREAS, on or about March 31, 2014, the State Mortgage Regulators, as coordinated by the MMC, commenced a multi-state mortgage loan servicing examination (the “Multi-State Servicing Examination”) of Nationstar covering the period of January 1, 2011 to March 31, 2014, in order to determine Nationstar’s compliance with applicable State and Federal laws and regulations, financial condition, and the adequacy of policies and procedures and the control and supervision of the licensed mortgage loan servicing operations. The Multi-State Servicing Examination was conducted by the State Mortgage Regulators from the states of Arizona, California, Connecticut, Florida, Georgia, Kansas, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, North Carolina, South Dakota, Utah and Washington. The Multi-State Servicing Examination of Nationstar was conducted pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Nationwide Cooperative Protocol for Mortgage Supervision as well as the Nationwide Cooperative Agreement for Mortgage Supervision (collectively the “CSBS/AARMR Protocol and Agreement”). The Report of Examination was issued by the MMC to Nationstar on May 6, 2015, and identified compliance violations of State and Federal law, concerns about the financial condition of the company, inadequate policies and procedures, and insufficient internal controls over the mortgage loan servicing operations of the company (the “MMC Servicing Report of Examination”).

WHEREAS, the MMC Servicing Report of Examination cited federal and state-specific compliance violations (cited herein for summary purposes only) including, but were not limited to:

• a. Violations related to failing to properly administer escrow accounts, including, but not limited to, failing to make timely tax payment disbursements and failing to timely refund escrow surpluses;
• b. Violations related to the administration of loss mitigation activity, including, but not limited to, failing to communicate effectively with certain borrowers regarding loss mitigation and failing to properly rescind/cancel a notice of default or a pending trustee’s sale upon execution of a permanent foreclosure prevention alternative;
• c. Failure to follow foreclosure and pre-foreclosure requirements;
• d. Failure to timely respond to consumer complaints with adequate responses;
• e. Failure to timely provide a notice of transfer of loan servicing (Hello Letter) to borrowers;
• f. Failure to provide borrowers private mortgage insurance disclosures on an annual basis;
• g. Failures related to obtaining regulatory approval to work at certain locations; and
• h. General other operational failures related to the administration of servicing files, including, but not limited to, failure to provide sufficient information in payoff notices.

WHEREAS, on or about March 31, 2014, the State Mortgage Regulators, as coordinated by the MMC, commenced a multi-state mortgage loan origination examination (the “Multi-State Origination Examination”) of Nationstar covering the period of March 1, 2012 to March 31, 2014, in order to determine Nationstar’s compliance with applicable State and Federal laws and regulations, financial condition, and the adequacy of policies and procedures and the control and supervision of the licensed mortgage loan origination operations. The Multi-State Origination Examination was conducted by the State Mortgage Regulators from the states of Alabama, Alaska, Arizona, California, Connecticut, Florida, Georgia, Kansas, Maine, Massachusetts, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, Oregon, South Dakota, Texas, Washington, and Wyoming. The Multi-State Origination Examination of Nationstar was conducted pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Protocol and Agreement. The Report of Examination was issued by the MMC to Nationstar on July 15, 2015, and identified compliance violations of both State and Federal law, deficiencies in the overall financial condition of the company, inadequate policies and procedures, and insufficient internal controls over the mortgage loan origination operations of the company (the “MMC Origination Report of Examination”).

WHEREAS, the MMC Origination Report of Examination federal and state-specific compliance violations (cited herein for summary purposes only) included, but were not limited to:

• a. Violations related to per diem interest, including the failure to properly calculate per diem interest, overcharging of per diem interest, and the making loans in excess of the usury rate;
• b. Failure to determine borrowers’ ability to repay;
• c. Failure to properly maintain records and failure to provide timely and accurate information to Participating States;
• d. Violations related to the failure to timely fund mortgages;
• e. Failure to provide and failure to timely provide certain disclosures and documents required by state or federal law in connection with loan origination activity;
• f. Violations regarding the failure to ensure compliant advertisements;
• g. Violations related to unlicensed loan officer activity;
• h. Failures related to obtaining regulatory approval to work at certain locations; and
• i. General other operational failures related to the origination process.

WHEREAS, based on the findings in the MMC Origination Report of Examination and MMC Servicing Report of Examination (collectively referred to as “Reports of Examination”), the MMC engaged in direct discussions with Nationstar’s Board of Directors (the “Board”) and senior management to identify steps the company should take to improve compliance, manage risk, and otherwise to ensure safe and sound operations as part of the Multi-State Servicing Examination and Multi-State Origination Examination (collectively referred to as “Multi-State Examinations”) resolution process. Nationstar chose to work cooperatively with the MMC without conceding the findings were correct or amounted to the violations asserted.

WHEREAS, Nationstar has assured the Participating States that it has resolved its issues related to the failure to timely fund mortgages and on a going-forward basis will fund all loans in compliance with state laws.

WHEREAS, in order to assess Nationstar’s progress in addressing violations and safety and soundness concerns identified in the Reports of Examination, the State Mortgage Regulators, as coordinated by the MMC, commenced a targeted follow-up visitation of Nationstar in October 2016 (“2016 Visitation”). The 2016 Visitation was conducted by the State Mortgage Regulators from the states of Connecticut, North Carolina, and Washington, pursuant to their respective statutory authorities, and in accordance with the protocols established by the CSBS/AARMR Protocol and Agreement. The scope of this visitation encompassed evaluating the following action items: Improving financial condition; establishing an enterprise-wide risk management program; establishing adequate policies and procedures; establishing a tracking system to assure that examination and audit issues are resolved; making improvements to the information systems, assuring adequate knowledgeable staffing; establishing an effective third-party vendor oversight program; establishing an adequate internal controls and audit program; establishing systems for timely production of customer files; establishing effective consumer communication systems; establishing effective processes for on-boarding loans to be serviced; establishing an effective methodology for problem resolution with consumers; and establishing a system to assure that policies and procedures are approved annually by the Board.

WHEREAS, the 2016 Visitation demonstrated that the Board and senior management had taken positive steps towards responding to the violations and safety and soundness concerns noted in the Reports of Examination and to address the operational and governance issues described therein.

WHEREAS, in late 2018/early 2019 an independent third party consultant evaluated, in part, Nationstar’s enterprise risk management program and determined that the company had made significant governance and operational improvements and changes designed to address weaknesses identified in the Reports of Examination. The consultant determined that the updates made by Nationstar sufficiently account for the growth of the company and now include the internal infrastructure and systems to control for major risks given the size and scope of Nationstar’s business and operations. This Agreement provides monitoring and reporting features focused on these operational and governance enhancements.

WHEREAS, additional issues were examined by the State Mortgage Regulators through ongoing work as part of the examination resolution process, including the identification of increases in monthly payments as trial modifications became permanent and vendor management resulting in potentially unnecessary property preservation fees.

WHEREAS, the State Mortgage Regulators and Nationstar enter into this Agreement with the understanding that the State Attorneys Generals, as plaintiffs, have entered a Consent Judgment with Nationstar in the United States District Court for the District of Columbia (the “AG Consent Judgment”) in coordination with this Agreement.

WHEREAS, the State Mortgage Regulators and Nationstar also enter into this Agreement with the understanding that the Consumer Financial Protection Bureau (“CFPB”) has entered into a Stipulated Final Judgment and Order with Nationstar in the United States District Court for the District of Columbia (the “CFPB Consent Judgment”) in coordination with this Agreement.

WHEREAS, through this Agreement, the AG Consent Judgment and the CFPB Consent Judgment, as further explained below and in those other settlements, Nationstar has paid or provided (or will pay or provide) the collective total amount of $91,255,843 consisting of: (i) payment to the Participating States under this Agreement (paragraph VII.5) and under the AG Consent Judgment (paragraph 8) of $6,434,100 for consumer remediation as provided in the referenced paragraphs; (ii) payment to the Participating States under this Agreement (paragraph VII.3) and under the CFPB Consent Judgment (paragraph 22) of $15,623,305, for consumer remediation as provided in the referenced paragraphs; (iii) remediation to consumer borrowers of $62,632,538 completed prior to this Agreement (as set forth in paragraphs VII.1 and VII.2 of this Agreement); (iv) payments to the Participating States under this Agreement (paragraphs VIII.1 -VIII.3) of $1,205,000 as Administrative Costs and an Administrative Penalty; (v) payments under the AG Consent Judgment (paragraph 10) of $3,860,900 for attorney’s fees, investigative costs and fees, and other purposes as set forth therein; and (vi) payments under the CFPB Consent Judgment (paragraph 28) of $1,500,000 for a civil monetary penalty. In addition, over the next four years Nationstar shall pay or provide additional amounts to certain consumers with active loan modifications, under this Agreement (paragraph VII.4) and under the CFPB Consent Judgment.

WHEREAS, certain terms and conditions are contained in the AG Consent Judgment and/or the CFPB Consent Judgment and in this Agreement, including, as set forth immediately above, with respect to some aspects of consumer remediation. Notwithstanding the coordinated nature of the three settlements, to the extent that the terms and conditions contained in this Agreement conflict with any provisions of the AG Consent Judgment and/or the CFPB Consent Judgment, the terms and conditions of this Agreement shall control.

WHEREAS, by reciting in this Order information about the AG Consent Judgment and the CFPB Consent Judgment, the State Mortgage Regulators are not asserting independent jurisdiction or authority to enforce either the AG Consent Judgment or the CFPB Consent Judgment, unless otherwise authorized to do so under any applicable state or federal law, rule, or regulation.

WHEREAS, Nationstar enters into this Agreement solely for the purpose of resolving disputes with the State Mortgage Regulators, including concerning the conduct described in the Reports of Examination, and does not admit any wrongdoing, allegations or implications of fact and does not admit any violations of applicable laws, regulations or rules governing the conduct and operation of its servicing or origination business, as well as with respect to any conduct related to persons identified for redress or remediation in connection with this Agreement. Nationstar acknowledges that the State Mortgage Regulators have and maintain jurisdiction over the underlying dispute, including all matters referred to in these recitals, and therefore have the authority to fully resolve the matter.

WHEREAS, Nationstar acknowledges that the State Mortgage Regulators are relying, in part, upon Nationstar’s representations and warranties stated herein in making their determinations in this matter. Nationstar further acknowledges that this Agreement may be revoked and the State Mortgage Regulators may pursue any and all remedies available under the law against Nationstar, if the State Mortgage Regulators later find that Nationstar knowingly or willfully withheld information from the State Mortgage Regulators.

WHEREAS, Nationstar represents that it has implemented, and will continue to maintain, procedures designed to ensure that Nationstar has complied with all regulatory requirements and recommendations identified in Reports of Examination.

WHEREAS, the State Mortgage Regulators have legal authority to initiate administrative actions based on the conduct described in the Reports of Examination.

WHEREAS, the intention of the State Mortgage Regulators in effecting this settlement is to resolve its operational concerns and violations, including those described in the Reports of Examination and in these recitals, and to close the Reports of Examination. To that end, the State Mortgage Regulators have agreed to the release of certain claims and remedies, as provided in the State Release, attached hereto as Exhibit C. The State Mortgage Regulators reserve all of their rights, duties, and authority to enforce all statutes, rules and regulations under their respective jurisdictions against Nationstar regarding any mortgage loan activities and/or servicing activities outside the scope of this Agreement. Additionally, a State Mortgage Regulator may consider this Agreement and the facts set forth herein in connection with, and in deciding, any examination, action, or proceeding under the jurisdiction of that State Mortgage Regulator, if the basis of such examination, action, or proceeding is not a direct result of the specific activity identified in the Reports of Examination; and that this Agreement may, if relevant to such examination, action or proceeding, be admitted into evidence in any matter before a State Mortgage Regulator.

WHEREAS, Nationstar agrees that certain claims and remedies are not released, as provided in Part III of Exhibit C attached hereto.

WHEREAS, Nationstar hereby knowingly, willingly, voluntarily, and irrevocably consents to the entry of this Order, which is being entered pursuant to the authority vested in each State Mortgage Regulator and agrees that it understands all of the terms and conditions contained herein. Nationstar acknowledges that it has full knowledge of its rights to notice and a hearing pursuant to the laws of the respective Participating States. By voluntarily entering into this Agreement, Nationstar waives any right to notice and a hearing, and review of such hearing, and also herein waives all rights to any other judicial appeal concerning the terms, conditions, and related obligations set forth in this Agreement.

Nationstar further acknowledges that it has had an opportunity to consult with independent legal counsel in connection with its waiver of rights and with the negotiation and execution of this Agreement, and that Nationstar has either consulted with independent legal counsel or has knowingly elected not to do so.

WHEREAS, Nationstar represents that the person signing below is authorized to execute this Agreement and to legally bind Nationstar.

WHEREAS, in that the Parties have had the opportunity to draft, review and edit the language of this Agreement, the Parties agree that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any action relating to, connected to, or involving this Agreement. Accordingly, the Parties agree to waive the benefit of any State statute, providing that in cases of uncertainty, language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.

NOW, THEREFORE, this Agreement having been negotiated by the Parties in order to resolve the issues identified herein and in the Reports of Examination, without incurring the costs, inconvenience and delays associated with protracted administrative and judicial proceedings, it is by the State Mortgage Regulators listed below hereby ORDERED:

I. JURISDICTION

1. That pursuant to the licensing and supervision laws of the Participating States, the Participating States have jurisdiction over Nationstar as described herein and may enforce the terms of this Agreement thereon unless otherwise stated in this Agreement.

II. APPLICABILITY

1. That the provisions of this Agreement and any Exhibits incorporated herein shall apply to Nationstar’s servicing activities regardless of whether the Company is servicing residential mortgage loans as a servicer or sub-servicer.

III. MORTGAGE SERVICING STANDARDS

1. That Nationstar shall comply with all mortgage servicing standards set forth in “Exhibit A”, which are attached and incorporated herein, and which are meant to supplement any servicing standards prescribed by Federal law and regulation, and should not be construed to impact any State Mortgage Regulator’s ability to enforce, under their licensing and regulatory authority, those servicing standards prescribed under Federal law and regulation. Nationstar shall implement the servicing standards in Exhibit A no later than January 1, 2021, or as otherwise stated in Exhibit A (the “Implementation Date”).

2. The Servicing Standards attached as Exhibit A shall remain in full force and effect for three (3) years from the Implementation Date. Nationstar's obligations to comply with the Servicing Standards shall expire on the date three years after the Implementation Date.

IV. RISK AND COMPLIANCE PROGRAMS

1. The Board shall enhance, implement and maintain an Enterprise Risk Management Program (“ERMP”) to identify, measure, monitor and control risk. The ERMP shall include the requisite policies and procedures to effectively address the company’s activities with specific attention to applicable State and Federal laws and regulations. The ERMP shall also include customary strategic planning as undertaken by management and overseen by the Board and a Compliance Management System (CMS) which complies with all the requirements set forth by the Consumer Financial Protection Bureau.

2. Policies and Procedures required as part of the ERMP shall, at a minimum, include:

• a. Record Retention Policies, including express language ensuring that records generated or possessed by Nationstar in the course of business are preserved and retained in a manner as prescribed by applicable State and Federal laws; and the section shall also include, at a minimum:
  • i. the name of documents to be maintained;
  • ii. the location of those documents;
  • iii. the source of the documents;
  • iv. the required time period for retention, and;
  • v. the format for retention (paper/electronic).
• b. Policies on each of the following topics:
  • i. The assessment and collection of any and all fees;
  • ii. The content and delivery of any and all required disclosures; and
  • iii. Collection of any and all payments, fees, and/or expenses by credit card.

1. The ERMP shall include a comprehensive and continuous training program to assure that mortgage loan originators and related staff are aware of the company’s policies and procedures, and changes to those policies and procedures, which are relevant to each employee’s job function. Within thirty (30) calendar days of the Effective Date, Nationstar shall submit to the State Mortgage Regulators on the Executive Committee a training plan, with calendar, which addresses all required areas of training. Within three hundred ninety-five (395) days of the Effective Date, and annually thereafter for two (2) years, Nationstar shall also submit to the State Mortgage Regulators on the Executive Committee an annual report, accompanied by an Affidavit signed by a member of senior management (such as the Chief Compliance Officer), that will confirm the training that has been provided and the recipients of said training by job function.

2. The Board shall maintain an internal audit program through a dedicated Internal Audit Department (“IAD”). The IAD shall report directly to the Board or the Board’s Audit Committee, with additional reporting to management employees, so as to provide the Board with independent and objective information as to whether major business risks are being managed appropriately and whether the company’s risk management and internal control framework is operating effectively.

3. In order to monitor the ERMP and the specific enhancements thereto as discussed herein, Nationstar will provide to the State Mortgage Regulators on the Executive Committee the following documentation and/or information according to the following terms: (1) The ERMP within thirty (30) calendar days of the Effective Date of this Agreement, (2) any written updates or changes to the ERMP, within thirty (30) calendar days of the conclusion of calendar years 2020, and 2021, and (3) for a period of two (2) years from the Effective Date of this Agreement, any finding within thirty (30) calendar days of the final determination of that finding that is designated as “high-risk”, “critical”, or any similar designation by any of Nationstar’s (i) business line risk assessment or quality control functions, (ii) the centralized risk and compliance functions, (iii) the IAD, and/or (iv) other similar functions contemplated under the ERMP.

V. AGREEMENT MONITORING

1. Internal or External Compliance Testing. Nationstar shall conduct transactional testing and compliance/controls testing, either internally or by retaining the services of a third-party firm, to assess Nationstar’s compliance with the Servicing Standards attached as Exhibit A to this Agreement. The testing shall be conducted in the ordinary course of Nationstar’s business consistent with industry standards and Nationstar’s internal testing schedule, which shall be based on an assessment of high-risk areas and emerging trends.

• a. All internal testing of compliance with the Servicing Standards will be conducted via three separate “lines of defense.” First, at the business level, business line managers will monitor routine operations to identify potential issues and evaluate operations for risk. Second, the Risk and Compliance department will conduct tests of both random and targeted loan populations. Third, the IAD will conduct risk-based testing.
• b. As part of its compliance testing, Nationstar shall conduct monthly tests for loans from all fifty states. Each test will be comprised of a review of an appropriate and representative sample to assess compliance. Testing will include inspection of loan documentation, review of loan servicing system notes or data, and management inquiries/interviews.

1. Executive Committee. An executive committee comprised of representatives of the government signatories to this Agreement and the State Attorneys Generals which entered into the AG Consent Judgment (“Executive Committee”) shall serve as the point of contact between Nationstar and the government signatories and shall receive reports and communications from Nationstar. The initial member states of the Executive Committee are: the State Mortgage Regulators of Arkansas, Maryland, Massachusetts, New Hampshire, Texas, and Washington; and the State Attorneys General of Arizona, California, Colorado, Connecticut, Florida, Illinois, Iowa, Nevada, North Carolina, Ohio, Oregon, Texas, and Washington. The Executive Committee may substitute representation, as necessary.

2. Nationstar’s Internal Audit. Nationstar’s IAD shall conduct audits of Nationstar’s servicing functions, including Nationstar’s compliance with the Servicing Standards. The IAD shall include the Servicing Standards in its annual risk assessment, which forms the basis for its annual audit plan, and shall conduct audits in accordance with its annual risk assessment and annual audit plan. Nationstar’s internal auditing schedule shall be based on an assessment of high risk areas and emerging trends. The audits shall be conducted in the ordinary course of Nationstar’s business consistent with industry standards and this Agreement.

• a. As part of its internal audit program, Nationstar shall conduct audits using a risk-based approach. Nationstar will conduct an annual risk assessment (including servicing reviews) to determine the frequency at which each Servicing Standard shall be tested. Nationstar shall assess compliance with each Servicing Standard by reviewing an appropriate and representative sample. Sample populations will be selected based on the attributes of the process and control that is being tested and will be reviewed for completeness and accuracy.
• b. Nationstar shall provide the annual audit plan for the Servicing Standards to the Executive Committee at least 30 days prior to the Implementation Date. The audit plan shall include the proposed schedule by which Nationstar will test each Servicing Standard. If requested by the Executive Committee within 30 days of receipt of the audit plan, the Executive Committee and Nationstar shall participate in a meet and confer to discuss any potential objections or concerns with the audit plan. Nationstar shall also provide any proposed changes to the Executive Committee at least 30 days before the change is to take effect, and the Executive Committee shall have the right to request a meet and confer within 30 days to discuss any potential objects or concerns.
• c. The annual audit plan, including which audits will be conducted in the coming year, shall be approved by the Audit and Risk Committee of Nationstar’s Board of Directors. The Audit and Risk Committee shall receive summaries of all audit results throughout the year, as well as, progress reports on open issues.

1. Corrective Action Activity. In the event material deficiencies are identified through testing or audits, Nationstar shall perform a root cause analysis and determine whether corrective action activity, including a plan for remediation of any consumer harm, is necessary. As part of Nationstar’s root cause analysis, Nationstar will examine whether the issue is systematic or isolated, whether it impacts policies and procedures, whether it impacts Nationstar’s training procedures, whether it impacts Nationstar’s technology, and the issue’s impact on Nationstar’s testing and audit procedures, and Nationstar will correct the issue as appropriate.

2. Reports. Nationstar shall submit to the Executive Committee on a quarterly basis (1) any Nationstar Risk, Compliance, and Internal Audit reports evaluating Nationstar’s compliance with the Servicing Standards during the preceding quarter; (2) any internal or external transactional testing results and compliance/controls testing results conducted with regard to the Servicing Standards; (3) any root-cause analysis and plan for corrective action activity developed or performed by Nationstar with regard to the Servicing Standards during the preceding quarter; and (4) reporting on Nationstar’s progress on any prior corrective action plan (collectively, the “Reports”). Nationstar shall submit Reports within 45 days following the end of each quarter while the servicing standards are in effect. Nationstar’s final report shall be issued within 45 days following the end of the 3rd quarter of 2023.

3. Confidentiality. Nationstar does not waive any privileges it may otherwise assert by submitting Reports pursuant to this section. Specifically, Nationstar shall designate as “CONFIDENTIAL” that portion of any report, supervisory and any supporting information, document, or portion of a document or other tangible thing provided by Nationstar to the Executive Committee, any member thereof, or to any government signatory that Nationstar believes contains a trade secret or confidential research, development, or commercial information subject to protection under applicable state or federal laws (collectively, “Confidential Information”). The following provisions shall apply to the treatment of Confidential Information:

• a. Except as provided by these provisions, all Confidential Information shall be identified as such in a document executed by a representative of Nationstar prior to or simultaneous with furnishing of a Report and shall cite the basis for the privilege asserted as to each identified portion.
• b. The Executive Committee, any member of the Executive Committee, and any government signatory receiving Reports and any Confidential Information therein agree to protect Confidential Information to the extent permitted by law, except as needed to support a public enforcement action.
• c. A government signatory who is not a member of the Executive Committee may request and obtain Reports and any Confidential Information therein, provided that it (i) agrees to adhere to the provisions herein; and (ii) participates in a meet and confer with the Executive Committee to discuss its request.
• d. To the extent that the Executive Committee, any member of the Executive Committee, or any government signatory receives a subpoena or court order or other request for production of Confidential Information, the government signatory shall, unless prohibited under applicable law, notify Nationstar of such request and if the government signatory or participating state is required to disclose Confidential Information pursuant to state or federal law, advise Nationstar of the disclosure as soon as is practicable to enable Nationstar to seek a protective order or stay of production of documents.
• e. The confidentiality provisions of this Paragraph 6 are binding on the Parties only to the extent that it does not violate any court order, constitutional provision, or statute prohibiting such confidentiality.

1. Auditing Period. The auditing and reporting period shall be for three years, commencing on the Implementation Date.

VI. SETTLEMENT ADMINISTRATOR

1. The Settlement Administrator appointed under “Exhibit B”, which is attached and incorporated herein, shall create a Qualified Settlement Fund within the meaning of Treasury Regulation Section 1.468B-1 of the U.S. Internal Revenue Code of 1986, as amended. The Settlement Administrator shall also establish a distribution account (the “Qualified Settlement Fund Distribution Account”) to receive from Nationstar (a) the deposit of the Borrower Payment Amount as provided in Section VII for borrower distributions, and (b) any portion of the Administrative Penalty and Administrative Costs that Nationstar deposits as provided for in Section VIII for distribution to Participating States.

VII. CONSUMER RELIEF

1. Past Consumer Remediation. That Nationstar, working in conjunction with the Participating States and the CFPB, during the examination resolution process, already has provided at least Fifty-Seven Million, Seven Hundred and Twenty-Three Thousand, and Forty Nine Dollars ($57,723,049) in consumer relief, including reimbursement for all consumers identified in the MMC Servicing Report of Examination. Such consumer relief included the following:

• a. For loan modification issues (relating to transfer of servicing rights): Sixteen Million, Two Hundred and Forty-Two Thousand, Eight Hundred and Nine Dollars ($16,242,809);
• b. For loan modification issues (relating to increases in monthly payments as trial modifications became permanent): Eight Million, Four Hundred and Seventy-Eight, Night Hundred and Sixty Dollars ($8,478,960);
• c. For escrow tax payment issues (untimely payments): Ninety-Three Thousand, Three Hundred and Seven Dollars ($93,307);
• d. For private mortgage insurance issues (failures concerning automatic terminations and borrower termination requests): Ten Million, Eight Hundred and Thirty-Two Thousand, Seven and Thirty-Eight ($10,832,738);
• e. For loss mitigation issues (wrongful foreclosures): One Million, Two Hundred and Fifty Thousand Dollars ($1,250,000); and
• f. For bankruptcy related issues (escrow shortage payments): Twenty Million, Eight Hundred and Twenty-Five Thousand, Two Hundred and Thirty-Five Dollars ($20,825,235).

1. That Nationstar, working in conjunction with the Participating States during the examination resolution process, already has provided for loan origination issues due to impermissible fees and charges under state law, Four Million, Nine Hundred and Nine Thousand, Four Hundred and Ninety Dollars ($4,909,490) in consumer relief, as well as reimbursement for all consumers identified in the MMC Origination Report of Examination.

2. Additional Payments to Consumers Affected by Loan Modification Escrow, and Foreclosure Practices. Within twenty-five (25) calendar days of the Effective Date of this Order, Nationstar shall deposit $15,623,305 into an escrow account established by the Fund Administrator referenced in this Paragraph (the “Fund Account”). The Fund Account will be administered pursuant to the Redress Plan, described in subparagraph a below, by a settlement administrator (“Fund Administrator”) who has been retained and will be paid for by Nationstar without any charge against the escrowed funds. The Fund Administrator will provide the redress as required by, and in accordance with, the Redress Plan, as additional remediation for consumers pursuant to the following terms:

• a. For loan modification issues (impermissible increases in monthly payments as trial modifications became permanent), Thirteen Million, And Five Hundred Thousand Dollars ($13,500,000) to certain borrowers whom Nationstar collected monthly modified mortgage loan payment amounts where the amounts charged for principal and interest exceeded the principal and interest amounts contained in the trial plan agreement (collectively the “Modification Payment Increase Borrowers”; individually a “Modification Payment Increase Borrower”). Within 30 days of the Effective Date, Nationstar must submit to the State Mortgage Regulators on the Executive Committee for review and non-objection a comprehensive written plan for providing redress to the Modification Payment Increase Borrowers consistent with this paragraph of the Agreement (“Redress Plan”). The State Mortgage Regulators on the Executive Committee, in consultation with the other State Mortgage Regulators, will have the discretion to make a determination of non-objection to the Redress Plan or direct Nationstar to revise it. If the State Mortgage Regulators on the Executive Committee direct Nationstar to revise the Redress Plan, Nationstar must revise and resubmit the Redress Plan to the State Mortgage Regulators on the Executive Committee within 20 days. After receiving notification that the State Mortgage Regulators on the Executive Committee has made a determination of non-objection to the Redress Plan, Nationstar must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Redress Plan. The Redress Plan must:
  • i. Specify how Nationstar will identify each Modification Payment Increase Borrower for the purpose of providing redress under this paragraphs of the Agreement;
  • ii. Certify that all remediation provided for under the Redress Plan has been provided to each specified Modification Payment Increase Borrower;
  • iii. Include the form of the letter (“Redress Notice”) and envelope to be sent Modification Payment Increase Borrowers who are entitled to redress of their right to redress; the Redress Notice must include a statement that the payment is made in accordance with the terms of this Agreement; Nationstar must not include in any envelope containing a Redress Notice any materials other than the approved Redress Notices and redress checks, unless Nationstar has written confirmation from the State Mortgage Regulators on the Executive Committee that the State Mortgage Regulators do not object to the inclusion of such additional materials;
  • iv. Describe the process for providing redress to Modification Payment Increase Borrowers entitled to redress, and include the following requirements:
    • 1. Prior to sending redress checks and Redress Notices, Nationstar must make reasonable attempts to obtain a current address for each Modification Payment Increase Borrower entitled to redress using, at a minimum, the National Change of Address System; and
    • 1. Nationstar must mail a redress check and the Redress Notice to each Modification Payment Increase Borrower entitled to redress;
• b. For bankruptcy related escrow shortage payment issues, to borrowers who have not already received remediation as redress for Nationstar’s collection of amounts related to escrow shortages after a completed Chapter 13 bankruptcy plan, Two Million, Twenty-Three Thousand, Three Hundred And Five Dollars ($2,023,305); and
• c. For foreclosure-related injuries, One Hundred Thousand Dollars ($100,000) to certain borrowers as redress upon whom Nationstar foreclosed while the borrowers were pursuing loss mitigation options.

1. Additionally, for Mortgage Modification Payment Increase Borrowers in active servicing at the start of an annual period, Nationstar will conduct an annual audit of its mortgage servicing portfolio designed to identify Modification Payment Increase Borrowers whose modified monthly principal and interest payment amounts continue to exceed their trial modification plan’s monthly principal and interest payment amount and for whom additional redress is required (hereinafter, the “Annual Lookback”). Nationstar shall conduct the Annual Lookback each year for the next four years to identify Modification Payment Increase Borrowers who continued to make a modified monthly principal and interest payment that exceeds their monthly trial modification plan’s principal and interest payment amount in that year. Nationstar will provide redress to identified Modification Payment Increase Borrowers in accordance with the applicable provisions of the Redress Plan referenced in paragraph 3.a. above in the form of: (1) an account credit for those Modification Payment Increase Borrowers whose loans are actively being serviced by Nationstar at the time of the Annual Lookback; or (2) a check for those Modification Payment Increase Borrowers whose loans are not actively being serviced by Nationstar at the time of the Annual Lookback. Within 30 days after each Annual Lookback, Nationstar must submit to the State Mortgage Regulators on the Executive Committee a comprehensive report of additional redress provided to Modification Payment Increase Borrowers consistent with this paragraph of the Agreement.

2. Payments to Borrowers Affected by Service Transfers and Property Preservation Practices. Within twenty-five (25) calendar days of the Effective Date of this Order, consistent with this Agreement, Exhibit B and instructions provided by the Executive Committee, Nationstar shall deposit Six Million, Four Hundred and Thirty-Four Thousand, and One Hundred Dollars ($6,434,100.00) (the “Borrower Payment Amount”) by electronic funds transfer into the Qualified Settlement Fund Distribution Account. The Borrower Payment Amount and any other funds provided to the Settlement Administrator for these purposes under paragraph 6 of this Section shall be administered in accordance with the terms set forth in Exhibit B. The Borrower Payment Amount shall be used: (1) for payments to borrowers who submit claims and are in either or both of the Service Transfer and Property Preservation Populations set forth below; and (2) for reasonable costs and expenses of the Settlement Administrator, including taxes and fees for tax counsel. The Populations eligible to receive payments are defined as follows:

• a. Service Transfer Population. The Service Transfer Population shall mean borrowers whose loans (i) were transferred in bulk to Nationstar for servicing between and including February 1, 2011 and December 18, 2017, and (ii) which became 30 days delinquent within 90 days of the service transfer, and (iii) which delinquency subsequently resulted in dispossession of the property in foreclosure, and (iv) which otherwise meet any additional criteria set by the Executive Committee; or
• b. Property Preservation Population. The Property Preservation Population shall mean borrowers whose property was (i) subject to a property inspection by Nationstar, or its agent, and (ii) was determined to be vacant, and (iii) as a result of that determination Nationstar or its agent changed the lock on the property between and including June 24, 2011 and December 29, 2017, and (iv) either within 30 days of the initial lock change the borrower requested access to the property, or within 90 days of the initial lock change the property was reported as occupied through a subsequent inspection, and (v) which otherwise meet any additional criteria set by the Executive Committee.

1. Only if the circumstances addressed in this Paragraph arise, Nationstar shall also pay or cause to be paid any additional amounts necessary to pay claims of borrowers in either or both of the Service Transfer and Property Preservation Populations, if any, whose data is provided to the Settlement Administrator by Nationstar after Nationstar warranted (pursuant to Paragraph 3 of Exhibit B) that the data provided for those Populations is complete and accurate (“Subsequent Population”). Borrowers in any applicable Subsequent Population will be eligible to receive the same per-loan check payment amount actually paid to eligible borrowers in the initial data population, after receiving a notice and making a valid claim under the process identical to that used for borrowers in the initial data population. If this Paragraph becomes applicable, the Parties will work with the Settlement Administrator to determine both the amount of additional funding required to make payments to eligible borrowers in the any Subsequent Population, and the additional settlement administration costs and expense involved in administering potential claims of any Subsequent Population.

2. After Nationstar has made any required deposits into the Fund Account and the Qualified Settlement Fund Distribution Account, Nationstar shall no longer have any property rights, title, interest or other legal claims in those funds.

3. Nationstar’s full and timely deposits into the Fund Account and the Qualified Settlement Fund Distribution Account, as provided for in Paragraphs 3 and 5 of this Section respectively, shall satisfy the requirements under those paragraphs for the payments to borrowers.

VIII. ADMINISTRATIVE COSTS AND PENALTY

1. Administrative Penalty. That Nationstar shall pay an Administrative Penalty of Seven Hundred And Fifty Thousand Dollars ($750,000) to be distributed equally among each Participating State (each Participating State will receive payment of $14,705.88) (the “per-state payment”). Nationstar shall pay the total Administrative Penalty amount within ten (10) calendar days following the Effective Date of this Agreement, by paying each Participating State the per-state payment by the means designated by each State. To the extent that Nationstar does not pay out the total Administrative Penalty within ten (10) calendar days of the Effective Date of this Agreement, then Nationstar shall deposit into the Qualified Settlement Fund Distribution Account within five (5) calendar days thereafter, for the benefit of each Participating State that has not been paid, that state’s portion of the Administrative Penalty, which amounts shall be for further administration by the Settlement Administrator.

2. Administrative Costs. That Nationstar shall pay Administrative Costs of Four Hundred and Fifty-Five Thousand Dollars ($455,000). Each Participating State that also took part in the examination or settlement shall receive an additional payment to cover administrative costs associated with the examination resolution process, with such costs allocated as follows: Arkansas, Fifty Thousand Dollars ($50,000); Maryland, Two Hundred and Forty-Five Thousand Dollars ($245,000); Massachusetts, Ninety Thousand Dollars ($90,000); New Hampshire, Twenty Thousand Dollars ($20,000); and Washington, Fifty Thousand Dollars ($50,000).

3. Nationstar shall pay the Administrative Costs within ten (10) calendar days following the Effective Date of this Agreement by the means designated by each Participating State receiving such payment. To the extent that Nationstar does not pay out the total Administrative Costs within ten (10) calendar days of the Effective Date of this Agreement, then Nationstar shall deposit into the Qualified Settlement Fund Distribution Account within five (5) calendar days thereafter, for the benefit of each Participating State that has not been paid, that state’s portion of the Administrative Costs, which amounts shall be for further administration by the Settlement Administrator.

4. That in the event that Nationstar fails to submit any Administrative Penalty or Administrative Costs set forth in this Agreement, in the amounts specified herein and in accordance with the applicable deadlines, or if any transfer of any monetary amount required under this Agreement is voided by a Court Order, including a Bankruptcy Court Order, Nationstar agrees not to object to a Participating State submitting a claim, nor attempt to defend or defeat such authorized claim, for any unpaid amounts against any surety bond that Nationstar may maintain in such Participating State as a condition of maintaining a license under the jurisdiction of that State Mortgage Regulator.

5. That a State Mortgage Regulator may elect to have its allocation of the Administrative Penalty set forth in Paragraph 1 of this section to be applied towards the respective Participating State’s consumer relief, and/or other such alternatives authorized under the respective Participating State’s law. Should a State Mortgage Regulator elect to apply its allocation of administrative penalties in such an alternative manner, solely for the purpose of ensuring the effective administration of payments pursuant to the terms of this Agreement, that State Mortgage Regulator shall notify the MMC in writing of such election on or before the Effective Date of this Agreement.

6. Nationstar’s full and timely payment of the Administrative Penalty and Administrative Costs, by direct payment to the Participating States or by deposit into the Qualified Settlement Fund Distribution Account, shall satisfy the requirements under Paragraphs 1, 2, and 3 of this Section for the payments of Administrative Penalty and Administrative Costs.

IX. ENFORCEMENT

1. General Enforcement Authority and Enforcement Relative to the Monitoring Standards, Consumer Relief, and Administrative Penalty: That the terms of this Agreement including all Exhibits attached and incorporated herein shall be enforced in accordance with the provisions, terms and authorities provided in this Agreement and under the respective laws and regulations of each Participating State.

2. No Restriction on Existing Examination and Investigative Authority. That this Agreement shall in no way preclude any State Mortgage Regulator from exercising its examination or investigative authority authorized under the laws of the corresponding Participating State in the instance a determination is made wherein Nationstar is found not to be adhering to the requirements of the Agreement, other than inadvertent and isolated errors that are promptly corrected by Nationstar, or involving any unrelated matter not subject to the terms of this Agreement. The Parties agree that the failure of Nationstar to comply with any term or condition of this Agreement with respect to a particular State shall be treated as a violation of an Order of the State and may be enforced as such. Moreover, Nationstar acknowledges and agrees that this Agreement is only binding on the State Mortgage Regulators and not any other Local, State or Federal Agency, Department or Office.

3. Notice. Prior to initiating an action to enforce the terms and conditions of this Agreement, a Participating State shall: (1) provide written notice to the Executive Committee and Nationstar of the basis for the potential action and a description of its allegations; (2) meet and confer with Nationstar, if so requested, within the first 30 days of issuing the written notice; and (3) allow Nationstar 30 days to respond to such notice in writing.

4. Sharing of Information and Cooperation. That the State Mortgage Regulators may collectively or individually request and receive any information or documents in the possession of the Compliance Committee or the MMC. This Agreement shall not limit Nationstar’s obligations, as a licensee of the State Mortgage Regulators, to cooperate with any examination or investigation, including but not limited to, any obligation to timely provide requested information or documents to any State Mortgage Regulator.

IX. RELEASE

1. The Participating States release claims and remedies as provided in the Release, attached hereto as Exhibit C and incorporated herein as the release provided to Nationstar. Certain claims and remedies are not affected, as provided in Part III of Exhibit C. The releases contained in Exhibit C shall become effective immediately upon the occurrence of (a) the Effective Date, and (b) deposit of the Borrower Payment Amount into the Qualified Settlement Fund Distribution Account as required under Section VII, and (c) payments of the Administrative Penalty and Administrative Costs as required under Section VIII.

X. GENERAL PROVISIONS

1. Effective Date. That this Agreement shall become effective upon execution by all of the State Mortgage Regulators for the Participating States and when posted on the NMLS (the “Effective Date”).

2. Public Record. That this Agreement shall become public upon the Effective Date.

3. Binding Nature. That the terms of this Agreement shall be legally binding upon Nationstar’s officers, owners, directors, employees, heirs, successors and assigns. The provisions of this Agreement shall remain effective and enforceable except to the extent that, and until such time as, any provisions of this Agreement shall have been modified, terminated, suspended, or set aside, in writing by mutual agreement of the State Mortgage Regulators collectively and Nationstar.

4. Standing and Choice of Law. That each State Mortgage Regulator has standing to enforce this Agreement in the judicial or administrative process otherwise authorized under the laws and regulations of the corresponding Participating State. Upon entry, this Agreement shall be deemed a final order of each respective State Mortgage Regulator unless adoption of a subsequent order is necessary under the laws of the corresponding Participating State. In the event of any disagreement between any State Mortgage Regulator and Nationstar regarding the enforceability or interpretation of this Agreement and compliance therewith, the courts or administrative agency authorized under the laws of the corresponding Participating State shall have exclusive jurisdiction over the dispute, and the laws of the Participating State shall govern the interpretation, construction, and enforceability of this Agreement.

5. Adoption of Subsequent Orders to Incorporate Terms. That a State Mortgage Regulator, if deemed necessary under the laws and regulations of the corresponding Participating State, may issue a separate administrative order to adopt and incorporate the terms and conditions of this Agreement. A State Mortgage Regulator may sua sponte issue such subsequent order without the review and approval of Nationstar provided the subsequent order does not amend, alter, or otherwise change the terms of the Agreement. In the event a subsequent order amends, alters, or otherwise changes the terms of the Agreement, the terms of the Agreement, as set forth herein, will control.

6. Privilege. That this Agreement shall not constitute a waiver of any applicable attorney-client or work product privilege, confidentiality, or any other protection applicable to any negotiations relative to this Agreement.

7. Titles. That the titles used to identify the paragraphs of this Agreement are for the convenience of reference only and do not control the interpretation of this Agreement.

8. Final Agreement. That this Agreement is the final written expression and the complete and exclusive statement of all the agreements, conditions, promises, representations, and covenants between the Parties with respect to the subject matter hereof, and supersedes all prior or contemporaneous agreements, negotiations, representations, understandings, and discussions between and among the Parties, their respective representatives, and any other person or entity, with respect to the subject matter covered herein, excepting therefrom any proceeding or action if such proceeding or action is based upon facts not presently known to a State Mortgage Regulator. The Parties further acknowledge and agree that nothing contained in this Agreement shall operate to limit a State Mortgage Regulator’s ability to assist any other Local, State or Federal Agency, Department or Office with any investigation or prosecution, whether administrative, civil or criminal, initiated by any such Agency, Department or Office against Nationstar or any other person based upon any of the activities alleged in these matters or otherwise.

9. Waiver. That the waiver of any provision of this Agreement shall not operate to waive any other provision set forth herein, and any waiver, amendment and/or change to the terms of this Agreement must be in writing signed by the Parties.

10. No Private Right of Action Created. That this Agreement does not create any private rights or remedies against Nationstar (or any of its affiliates or subsidiaries), create any liability for Nationstar (or any of its affiliates or subsidiaries) or limit defenses of Nationstar (or any of its affiliates or subsidiaries) for any person or entity not a party to this Agreement. An enforcement action under this Settlement Agreement and Consent Order may be brought solely by a party or the Executive Committee.

11. Costs. That except as otherwise agreed to in this Agreement, each party to this Agreement will bear its own costs and attorneys’ fees associated with this enforcement action.

12. Notices. That any notice to Nationstar and/or the State Mortgage Regulators required or contemplated by this Agreement shall be delivered, if not otherwise described herein, by electronic copy to Nationstar through the “Primary Company Contact” for Nationstar listed in the Nationwide Multistate Licensing System (NMLS), or similar contact system, and to the State Mortgage Regulators by direct written notification.

13. Counterparts. That this Agreement may be executed in separate counterparts, by facsimile or by PDF. A copy of the signed Agreement will be given the same effect as the originally signed Agreement.

14. That nothing in this Agreement shall relieve Nationstar of its obligation to comply with applicable State and Federal law.

It is so ORDERED.

IN WITNESS WHEREOF, in consideration of the foregoing, including the recital paragraphs, and with the Parties intending to be legally bound, do hereby execute this Agreement this 7th of December, 2020.

NATIONSTAR MORTGAGE, LLC By: Jay Bray President and Chief Executive Officer