Attorney General Olens Part of $2.1 Billion Settlement with Mortgage Servicer Ocwen
Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, have agreed to a $2.1 billion dollar joint state-federal settlement with Attorney General Sam Olens, 48 additional states and the District of Columbia and the federal government.
In Georgia, Ocwen may provide approximately 7,602 troubled borrowers with an estimated $35.7 million in first lien principal reductions. An undetermined number of Georgia homeowners whose loans have already been foreclosed may be eligible for cash payments. The payment amount, which is contingent on the number of consumers who submit valid claims, is projected to exceed $1,000.
The settlement terms address servicing misconduct by Ocwen, and two companies later acquired by Ocwen, Homeward Residential Inc. and Litton Home Servicing LP. Ocwen specializes in servicing high-risk mortgage loans.
According to a complaint filed in the U.S. District Court for the District of Columbia, the misconduct resulted in premature and unauthorized foreclosures, violations of homeowners’ rights and protections and the use of false and deceptive documents and affidavits, including “robo-signing.”
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 federal government.
“Through a court order, this settlement holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to homeowners, and prevents future fraud and abuse,” said Olens.
Under the settlement, Ocwen agreed to $2 billion in first-lien principal reduction and $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans.
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 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), 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.
Ocwen Agreement Highlights
- Ocwen commits to $2 billion in first-lien principal reduction.
- Ocwen pays $125 million to borrowers associated with 183,984 foreclosed loans.
- Ocwen is required to comply with the standards for servicing loans found in the 2012 National Mortgage Settlement between the state attorneys general and federal government and the five largest mortgage banks, as well as several new standards.
- An independent monitor will oversee implementation of the settlement to ensure compliance.
- Borrowers and investors can pursue individual, institutional or class action cases regardless of the agreement.
- Ocwen pays $2.3 million for settlement administration costs.
The final agreement, through a consent judgment, was filed in U.S. District Court in Washington, D.C. If approved by a judge, it will have the authority of a court order.
Because of the complexity of the mortgage market and this agreement, which will span a three year period, in some cases Ocwen will contact borrowers directly regarding principal reductions. However, borrowers should contact Ocwen to obtain more information about principal reductions and whether they qualify under terms of this settlement. Consumers may call Ocwen toll-free at 1-800-337-6695 or send email to [email protected].
A settlement administrator will contact qualified borrowers associated with foreclosed loans regarding cash payments. Additional information will be made available as the settlement programs are implemented. For more information, consumers may visit www.cfpb.gov.