Restitution includes funds for homeowners wrongly foreclosed upon and principal reductions for current homeowners whose property values are under water
OLYMPIA – December 20, 2013 – (RealEstateRama) — The Washington State Department of Financial Institutions (DFI) Division of Consumer Services is pleased to announce a multi-state loan servicing settlement with Ocwen Loan Servicing, LLC, state Attorneys General and the Consumer Financial Protection Bureau.
The settlement originated from a multi-state mortgage examination conducted in 2010 by eight state mortgage regulators: Florida, Arizona, Georgia, Louisiana, Maryland, Massachusetts, Mississippi, and West Virginia.
While Washington was not among the eight examination states, Washington’s DFI actively participated in reaching this settlement, working as part of the multi-state mortgage committee to determine consumer restitution.
“Our Division also 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 AG’s consent agreement,” Deborah Bortner, Director of DFI Consumer Services Division added.
The agreement terms:
- Bring a consistent set of servicing standards that will enhance the operation of Ocwen and the servicing industry;
- Provide $125 million to borrowers who may have been wrongly foreclosed upon;
- Provide $2 billion in available principal reduction for borrowers who are struggling to make their mortgage payments and whose property values are under water;
- Include that the settlement will be overseen by a monitor to ensure compliance.
“We are pleased to be part of a multi-state team taking action against a company that took advantage of Washington homeowners,” DFI Director Scott Jarvis said. “We hope this agreement puts businesses victimizing Washington residents on notice that illegal activity will not go unpunished in our state.”
The agreement cites specific allegations of wrongdoing found during the examination, including:
- Lack of controls related to document execution, including evidence of robo-signing, unauthorized execution, assignment backdating, improper certification and notarization, chain of title irregularities, and other related practices affecting the integrity of documents relied upon in the foreclosure process;
- Deficiencies in loss mitigation and loan modification processes, including but not limited to:
- Failure to effectively communicate with borrowers regarding loss mitigation and other foreclosure avoidance alternatives;
- Failure to account for documents submitted in tandem with application for loss mitigation assistance;
- Lack of reasonable expedience in approving or denying loss mitigation applications;
- Providing false or misleading reasons for denial of loan modifications; and
- Failure to honor the terms loan modifications for transferred accounts and continued efforts to collect payments under the original note terms.
- Lack of controls related to general borrower account management, including but not limited to:
- Misapplication of borrower payments;
- Inaccurate escrow accounting and statements; and
- Assessment of unauthorized fees and charges.
- Inadequate staffing and lack of internal controls related to customer service;
- Deficiencies in control and oversight of third-party providers, including but not limited to, local foreclosure counsel;
- Deficiencies in document maintenance processes, including but not limited to, failure to produce documents requested in tandem with examinations; and
- Deficiencies in management control and supervision necessary to ensure compliance with applicable laws and regulations.
Ocwen Financial Corporation is a publicly traded Florida corporation headquartered in Atlanta, Ga. Ocwen Loan Servicing, LLC is a limited liability company and wholly owned subsidiary servicing company of Ocwen Financial Corporation located in Palm Beach, Fla.
Borrowers should contact Ocwen directly to obtain information about principal reductions and whether they qualify for assistance under the terms of this settlement.
- Ocwen Consent Order (PDF)*
- Press Release from the Washington State Attorney General
- CFPB Blog: What the Ocwen Enforcement Action Means for You
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877-746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.
About Division of Consumer Services
www.dfi.wa.gov/cs ▪ 360-902-8703 ▪ 877-746-4334, x 8703
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as “payday lenders.” The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.
Lyn Peters, Director of Communications
PH (360) 902-8731 lyn.peters (at) dfi.wa (dot) gov
Deborah Bortner, Director Division of Consumer Services
PH 360-902-0511, deborah.bortner (at) dfi.wa (dot) gov