The federal regulatory apparatus that was supposed to police mortgage servicers is shrinking. The Consumer Financial Protection Bureau reduced supervisory examinations, allowed mortgage-related consent orders to expire ahead of schedule, and in April 2025 narrowed its enforcement focus away from systemic discrimination patterns toward only intentional racial discrimination with individually identified victims. Twelve enforcement actions were tracked in 2025, down from thirteen the year before and fourteen the year before that. Mortgage compliance attorneys had already predicted what would follow. State regulators are filling the vacuum, and they are doing it with specificity.
Washington State’s Department of Financial Institutions opened an investigation of more than 125 consumer complaints against Newrez LLC, the Rithm Capital subsidiary that operates as Shellpoint Mortgage Servicing, and in April 2026 filed a Statement of Charges seeking $4,175,000 in fines and broad consumer remediation. Regulators alleged violations spanning the full servicing lifecycle between 2021 and 2026, including incorrect loan boarding, credit reporting errors tied to private mortgage insurance, improper escrow management including force-placed insurance billed to borrowers who already carried coverage, payment misapplication, inaccurate borrower statements, and failure to participate in foreclosure mediation proceedings in good faith. Washington officials called it one of the most significant fines the agency had sought outside of multi-state enforcement actions. Newrez called it a surprise, said it received no prior notice, and announced it would contest the charges vigorously.
That money has to be recaptured somehow. Whether it is the reducing in fees paid to Labor or a new and creative way to screw homeowners, it most certainly is already on an agenda.
The charges did not originate entirely with Newrez’s own servicing operations. A significant portion traces to Specialized Loan Servicing, a Computershare unit that Rithm Capital and Newrez acquired in 2024. That acquisition imported a documented liability, including attempted collections on forgiven zombie second liens originated before the Great Recession. Newrez had already paid $4.7 million in restitution in Massachusetts to resolve similar SLS-inherited charges before Washington filed. The pattern is visible in outline: acquire a distressed servicing book, absorb the regulatory exposure, pay one state to make a tranche of it go away, and encounter the next state’s investigation before the prior settlement is cold. Washington is that next state. It will not be the last.
California moved on escrow. The state Department of Financial Protection and Innovation reached a $1.8 million settlement with a mortgage lender and servicer over failure to establish custodial accounts for borrower trust funds, failure to reconcile escrow liability ledgers, and overcharging thousands of borrowers per diem interest in violation of state financial regulations. Minnesota moved legislatively rather than through enforcement. A law signed in late May 2026 requires mortgage servicers handling more than 500 residential loans in the state to record all telephone conversations with borrowers and retain those recordings for five years. Written complaints trigger a 60-month file retention requirement covering all related correspondence, emails, incomplete documentation, and advertisements. Servicers must provide escrow reserve funding notifications both annually and on borrower request. State officials will monitor servicing transfers specifically to ensure borrowers are not left uninformed when loans change hands.
The OCC finalized two rules in May 2026 affirming federal preemption of state interest-on-escrow laws, effective June 18, 2026, and the Second Circuit backed that position in its Cantero v. Bank of America ruling. The circuit split with the First and Ninth Circuits makes a Supreme Court return probable. The preemption question matters to national banks. It does not extend to non-bank servicers. Newrez is a non-bank servicer. The OCC rules offer it no shelter from the consumer protection statutes that Washington, California, and Minnesota are now enforcing with increasing specificity and increasing dollar amounts.
Against that backdrop, it is worth examining what Stewart Information Services and Fidelity National Financial have inherited alongside the operational assets they have spent the last several years acquiring.
Stewart closed its $330 million acquisition of the property preservation and inspection operations of Mortgage Contracting Services in December 2025, bringing into its corporate structure all field services operations and technology supporting mortgage servicers and lenders in their property preservation work. Stewart is a title company with a century of regulatory standing. Its acquisition of MCS places it directly inside the default servicing supply chain, the same supply chain where federal courts in Florida are receiving complaints about inspection fees billed for work that could not be completed at gated properties, where loan histories document inspection vendors rotating through the same inaccessible addresses for years without ceasing to bill, and where RESPA litigation is accumulating around the specific question of whether servicers can charge borrowers for services their own vendors documented as impossible to perform. Stewart’s legacy business is built on its standing with state regulators. An enforcement action connecting its newly acquired field services arm to inspection fee billing practices of the kind now in federal court would land differently for Stewart than it would for a standalone order mill with no title plant to protect.
Fidelity National Financial and its ServiceLink subsidiary carry a liability history that is not legacy in any comfortable sense of the word. Federal banking agencies fined ServiceLink $65 million in 2017 for improper actions committed by its predecessor, Lender Processing Services, with regulators stating at the time that they would continue monitoring compliance with the amended consent order. The LPS history is worth revisiting in full, because the conduct it documented became the template against which every subsequent servicer scandal in the industry has been measured.
Lender Processing Services was, at its peak, the largest mortgage services firm in the United States. It processed loan documents, managed default servicing workflows, and provided the technology infrastructure connecting servicers, attorneys, and vendors across the foreclosure pipeline. What federal and state investigators eventually documented was a system in which that infrastructure was used to fabricate, forge, and robosign mortgage documents on an industrial scale. Affidavits attesting to personal knowledge of loan file contents were signed by workers who had reviewed nothing. Documents bearing signatures of named bank officers were executed by temporary employees who had been given authority to sign those officers’ names. Notarizations were applied to documents that had not been reviewed by the notary and in some instances had not been signed in the notary’s presence. The volume was not incidental. LPS processed millions of loan documents annually, and the robosigning operation ran across multiple sites and multiple years.
The $25 billion National Mortgage Settlement of 2012 addressed the servicers whose documents LPS had processed. LPS itself resolved criminal charges in 2013, with its former document division subsidiary DocX pleading guilty to a criminal conspiracy charge in Missouri. The company’s founder and president of the DocX unit, Lorraine Brown, was sentenced to five years in federal prison. LPS rebranded through acquisition, becoming ServiceLink under Fidelity National Financial’s ownership. The $65 million fine in 2017 formally closed one tranche of federal agency oversight. The consent order monitoring language was explicit that regulators retained ongoing oversight authority.
What those precedents establish is a documented institutional capacity for systemic misconduct at scale when servicing volume is high, margin pressure is constant, and vendor accountability is structured to reward throughput over accuracy.
Those conditions have not changed. They have intensified. The FHA delinquency rate as of the fourth quarter of 2025 stood at 11.52 percent. The addressable field services market tied to that delinquency pool runs into the billions annually. Servicers are operating under increasing pressure from rising defaults, frozen contractor pay rates that have not adjusted for fuel or inflation in years, and a state regulatory environment that is now specifically targeting the documentation failures and borrower communication breakdowns that define how the default servicing supply chain actually operates.
The question the LPS history raises for 2026 is not whether the major platforms have learned from it. The question is structural. When a title company acquires a field services operation billing for uninspectable properties, and state regulators are specifically recording and retaining borrower complaint files for five years, and federal courts are receiving exhibits that include vendor invoices, inspector work order reports, and GPS screenshots of guard gates taken from a car window at 3:55 in the afternoon, the documentation trail that enabled the LPS prosecutions already exists. It is being assembled, case by case, complaint by complaint, in state DFI investigation files and federal court discovery requests across the country. Whether it rises to the scale of what LPS produced depends on how long servicers continue to treat fee billing accuracy as a cost center rather than a liability. The Washington DFI investigation ran from 2021 through 2026. Five years of complaint accumulation produced a $4.175 million enforcement action against one servicer in one state. Multiply that arithmetic across the servicing portfolios that Rithm, Fidelity, and Stewart now control, and the question of whether the robosigning era is truly history answers itself.
