What NewRez did
New Jersey's Department of Banking and Insurance announced August 12 that NewRez LLC, a Fort Washington, Pennsylvania-based mortgage servicer registered under NMLS ID 3013, agreed to pay $15.5 million to settle findings from a multistate examination. Regulators found the company had improperly imposed "force-placed" hazard insurance — coverage a servicer buys and charges to the borrower when it believes the borrower lacks adequate insurance — on more than 4,200 borrowers nationwide who in fact already had active homeowners insurance policies in place.
NewRez self-identified and proactively remediated more than $4.5 million to affected borrowers, according to the New Jersey release, and will pay nearly $11 million more in additional costs and penalties as part of the settlement. The company must now implement enhanced monitoring for loans with force-placed insurance and strengthen related internal controls. New Jersey's release said 208 borrowers in the state were affected, that they received a combined $225,783.08 in restitution, and that New Jersey's penalty share came to $518,296.09.
A discrepancy worth flagging
The participating states' own releases do not agree on a single headline count. New Jersey's release describes the settlement as involving "New Jersey and 46 state financial agencies in 46 states." Arkansas's release instead says "Arkansas and 48 state financial agencies" reached the settlement, and the Conference of State Bank Supervisors, which represents the state regulators, put it differently again: "forty-eight state financial agencies in 47 states." Estate Wire could not find a single settlement document reconciling these three figures and reports each regulator's own characterization rather than asserting one is correct.
The District of Columbia's Department of Insurance, Securities and Banking led the multistate enforcement team as lead agency, with Arkansas, Iowa, Massachusetts and Montana assisting, according to both New Jersey's and DC's releases. DC Commissioner Karima Woods said force-placed insurance "passes on the cost of these expensive policies directly to the homeowner while offering very little protection and undermines trust in the mortgage system." The underlying multistate examination was opened around January 24, 2022, by the Multi-State Mortgage Committee, whose member regulators belong to the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, and covered NewRez's servicing conduct from November 1, 2020, to October 31, 2021.
Why force-placed insurance draws scrutiny
Force-placed insurance exists to protect a lender's collateral interest when a borrower's own coverage lapses, is cancelled, or is judged insufficient, and the borrower has not secured a replacement policy. It is typically far more expensive than insurance a homeowner buys directly, in part because the insurer is pricing risk without underwriting the individual borrower. Charging borrowers for force-placed coverage while they already carry adequate insurance produces a direct, quantifiable overcharge — the harm regulators are describing here — rather than a mere procedural violation. The examination team drew its members from Connecticut, the District of Columbia, Georgia, Iowa, Massachusetts and other participating states' mortgage regulatory agencies, according to the settlement agreement and consent order, all operating under the Multi-State Mortgage Committee's coordinated examination framework for large nonbank servicers.
New Jersey's examination period, per the settlement, covered servicing conduct roughly from late 2020 through late 2021, with the investigation beginning in January 2022 — meaning the settlement resolves conduct identified more than four years before it was finalized, a timeline not unusual for multistate financial-services examinations that must sequence findings, remediation and penalty allocation across dozens of state regulators before a joint consent order can be finalized.