$49M in principal mortgage reductions for struggling homeowners and $1,000+ cash payments to eligible foreclosed borrowers in Washington state
Tougher mortgage servicing standards hold Ocwen accountable for past practices, ensure fundamental servicing reforms
SEATTLE – December 20, 2013 – (RealEstateRama) — Ocwen Financial Corporation of Atlanta, Georgia, and its subsidiary, Ocwen Loan Servicing, have agreed to a joint state-federal settlement with Attorney General Bob Ferguson, 48 additional states and the District of Columbia, and the federal Consumer Financial Protection Bureau (CFPB).
A national mortgage servicer, Ocwen specializes in servicing high-risk mortgage loans, including mortgages in Washington state. The settlement addresses mortgage servicing misconduct by Ocwen, and two companies later acquired by Ocwen, Homeward Residential Inc. and Litton Home Servicing LP that led to premature and unauthorized foreclosures on homeowners.
Under the settlement, Ocwen agrees to provide $2 billion nationwide in first-lien mortgage principal reduction, and an additional $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans nationwide.
In Washington state, Ocwen will provide troubled borrowers with an estimated $49 million in first-lien mortgage principal reductions. In addition, 3,637 Washington borrowers who lost their homes to foreclosure while serviced by Ocwen will be eligible to receive a cash payment. The payment amount is projected to exceed $1,000 per borrower.
“Ocwen’s misconduct is similar to the unacceptable practices we saw with the five mortgage servicers involved in the National Mortgage Settlement last year,” Ferguson said. “We must continue our work to ensure mortgage servicers play by the rules and treat borrowers fairly.”
Ocwen’s behavior resulted in premature and unauthorized foreclosures
According to a complaint filed in the U.S. District Court for the District of Columbia, Ocwen engaged a number of practices that harmed consumers, including:
- Failing to timely and accurately apply payments made by borrowers and failing to maintain accurate account statements;
- Charging unauthorized fees for default-related services;
- Providing false or misleading information to borrowers regarding loans that had been transferred from other mortgage servicers;
- Failing to provide accurate and timely information to borrowers who sought information about loss mitigation services, including loan modifications;
- Improperly denying loan modification relief to eligible borrowers;
- Providing false or misleading reasons for denial of loan modifications;
- Failing to honor in-process trial modifications agreed to by prior servicers on transferred loans; and
- ‘Robo-signing’ affidavits in foreclosure proceedings, where an employee signed thousands of documents and affidavits without verifying the information contained in the document or affidavit.
As a result, Ocwen violated homeowners’ rights and protections, engaged in premature and unauthorized foreclosures, and charged consumers improper fees and charges.
Overview of the Ocwen settlement
The settlement with the nation’s fourth largest mortgage servicer is the result of a massive civil law enforcement investigation and initiative that includes state Attorneys General, state mortgage regulators and the CFPB.
Through a court order, the settlement holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to homeowners, and stops future fraud and abuse.
Ocwen Agreement Highlights:
- Ocwen commits to $2 billion in first-lien mortgage principal reduction;
- Ocwen pays $125 million cash to borrowers associated with 183,984 foreclosed loans;
- Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards;
- An independent monitor will oversee implementation of the settlement to ensure compliance;
- The government can pursue civil claims outside of the agreement, and any criminal case; borrowers and investors can pursue individual, institutional or class action cases regardless of the agreement; and
- Ocwen pays $2.3 million for settlement administration costs.
Joseph A. Smith, Jr., Monitor of the National Mortgage Settlement, will oversee the Ocwen agreement’s implementation and compliance through the Office of Mortgage Settlement Oversight.
The Ocwen settlement is in addition to the National Mortgage Settlement, a three-year agreement reached in 2012 with the attorneys general of 49 states and the District of Columbia, the federal government, and five mortgage servicers (Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo). The National Mortgage Settlement has so far provided more than $51 billion in relief to distressed homeowners and created significant new servicing standards. The U.S. District Court in Washington, D.C. entered the consent judgments on April 5, 2012.
In addition to the Washington State Attorney General’s Office, the Washington State Department of Financial Institutions (DFI) Consumer Services Division actively participated in reaching this settlement. DFI worked as part of the multi-state mortgage committee to determine consumer restitution and independently worked as members of the state mortgage regulators to negotiate and draft the states’ settlement agreement and consent order to be issued simultaneously with the CFPB’s and state AGO’s consent agreement.
How to find out if you quality for principal reductions
In some cases Ocwen will contact borrowers directly regarding mortgage principal reductions. Regardless, borrowers should contact Ocwen to obtain more information about mortgage principal reductions and whether they qualify under terms of this settlement at 1.800.337.6695 or ConsumerRelief (at) Ocwen (dot) com. More information can be found on the fact sheet, here.
A settlement administrator will contact qualified borrowers associated with foreclosed loans regarding cash payments. More information about when and how borrowers will be contacted will be made available as the settlement programs are implemented.
For more information on the agreement: www.CFPB.gov
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.
- Janelle Guthrie, Director of Communications, (360) 586-0725
- Alison Dempsey-Hall, Deputy Communications Director, (206) 641-1335