Mr. Cooper and ACI Payments move towards settlement

Mr. Cooper and ACI Payments are taking steps to move past a servicing mistake that occurred two years ago, which involved erroneously drafting payments totalling a combined $2.3 billion from borrowers' bank accounts.

The mortgage lender and servicer sued the payment software company a little over one year ago for the error, but recently asked a Texas federal court to approve a settlement. Details are sparse regarding what the agreement will entail.

Said settlement should be finalized and signed by Sept. 30, 2024. After that, Mr. Cooper will file a voluntary dismissal of the suit, a settlement notice submitted Aug. 30 said.

Litigation was first filed by the Greater Dallas-area servicer in September 2023 and accused the technology company of not abiding by their agreement when it used Mr. Cooper's confidential information in the incident.

Contractors for ACI Payments, a subsidiary of ACI Worldwide, caused the error in 2021 when they used Mr. Cooper's confidential customer information in quality assurance testing, inadvertently triggering mortgage payment withdrawals at borrower's banks. 

This snafu impacted close to 500,000 borrowers with mortgages serviced by Mr. Cooper. Roughly 100 of those impacted incurred non-sufficient funds fees from their banks as a result of ACI's error, the mortgage servicer previously said.

Mr. Cooper declined to comment on pending litigation. ACI Payments could not be reached for commentary.

The two companies moving towards settlement was first reported by HousingWire.

Apart from litigation filed by Mr. Cooper, a handful of regulators, including the Consumer Financial Protection Bureau, penalized the payment software company for its error. 

The CFPB slapped ACI with a $25 million fine in June 2023, noting that the payment company's "unlawful actions created headaches for hundreds of thousands of borrowers."

At the time, ACI said it "consented to the issuance of the consent order without admitting any wrongdoing to avoid the expenses and distraction of litigation." 

Four months later, ACI Payments reached a $20 million settlement with 44 state agencies and 50 state attorneys general Tuesday over the technical glitch.

"Companies must be more diligent when handling consumers' data and payment information to not cause worry and panic among consumers," Letitia James, the attorney general of New York, said in a previous statement commenting on the settlement. About 27,000 New Yorkers were impacted by the technical mistake.