New York State Department of Financial Services Announces $15.5 Million Multi-state Settlement with Mortgage Servicer

August 12, 2026 - 21:51

The New York State Department of Financial Services has announced a major multi-state settlement with a large mortgage servicer, resolving claims that the company improperly charged borrowers for unnecessary insurance coverage. The agreement, reached with financial regulators from 46 states, requires NewRez LLC to pay a combined $15.5 million in restitution and penalties.

The issue centered on force-placed insurance, which lenders purchase when a homeowner's policy lapses. Regulators found that NewRez imposed these costly policies on borrowers who actually had active homeowners insurance at the time. This practice led to inflated monthly mortgage payments and, in some cases, put borrowers at risk of default.

Under the terms of the settlement, NewRez has already returned $409,026 to affected New Yorkers. The company will also pay a $602,226 penalty to the state. Nationwide, the settlement provides relief to thousands of borrowers who were wrongly charged.

The New York Department of Financial Services emphasized that mortgage servicers have a clear duty to treat borrowers fairly and follow proper procedures before adding force-placed insurance. The settlement serves as a reminder that companies must verify a borrower's coverage status before taking such action. NewRez, which did not admit wrongdoing, has agreed to reform its practices and improve compliance going forward.