Newrez faces Washington state enforcement action over alleged servicing failures

The Washington State Department of Financial Institutions (DFI) filed a statement of charges against multichannel mortgage lender Newrez, alleging repeated servicing violations between 2021 and 2026. It seeks a fine of about $4 million and broad consumer remediation.

DFI said the action, announced Monday, follows an in-depth investigation of more than 125 consumer complaints involving the large nonbank servicer. The agency said it found “significant deficient business practices” that allegedly harmed Washington borrowers.

In a statement given to HousingWire, a Newrez spokesperson said the company was not given prior notice of the charges and intends to contest the enforcement action.

According to DFI, Newrez allegedly engaged in unfair or deceptive practices that affected 29 Washington consumers by failing to mediate in good faith during foreclosure proceedings, by providing misleading or inaccurate information, and by responding to concerns in an untimely manner.

In addition, the company allegedly onboarded new loans incorrectly, leading to errors with private mortgage insurance and inaccurate credit reporting; applied mortgage payments incorrectly; and improperly serviced escrow accounts — for example, by force-placing insurance when borrowers already had coverage.

It also allegedly provided inaccurate mortgage statements and failed to timely respond to the department’s investigation of consumer complaints.

“Washington homeowners rely on licensed mortgage servicers to correctly service their loans, and we will hold companies accountable when they put consumers at risk of losing their homes or when they financially harm consumers,” DFI Director Charlie Clark said in a statement.

DFI is seeking an order requiring Newrez to stop violating the law, fix all consumer issues and pay a fine of $4,175,000. It alleges violations of Washington’s Consumer Loan Act.

The Newrez spokesperson said the action came without warning or normal engagement.

“We value our regulatory relationships, and the surprise nature of this announcement is disappointing,” the spokesperson said. “Newrez takes its obligations to our customers and investors very seriously and is committed to operating in compliance with all applicable state and federal laws.

“While we are still reviewing the specifics of each claim, we fundamentally disagree with the state’s charges and the way our practices have been characterized and intend to vigorously contest the action and its allegations.”

Newrez has the right to request a hearing to contest DFI’s charges.

Flávia Furlan Nunes reported and wrote this article with drafting assistance from HousingWire Automation, an editorial tool that helps transform announcements and industry data into HousingWire-style news coverage.