Mortgage servicing giant Ocwen Financial Services has reached a national settlement over alleged improprieties by the company and its subsidiaries related to mortgage servicing and foreclosure practices. The settlement, following a joint investigation by the Consumer Financial Protection Bureau, state banking regulators, and 49 state attorneys general, will bring more than $2 billion in relief to consumers in all 50 states. In New York, for example, there will be $292,716,793 in first-lien principal reductions going to homeowners across the state.
"While recent actions have brought much-needed relief to thousands of New Yorkers since the collapse of the housing market, far too many homeowners still face unnecessary challenges as they fight to stay in their homes,” said New York Attorney General Eric T. Schneiderman. “From the 2012 National Mortgage Settlement and last month’s historic JP Morgan agreement to today’s $2 billion settlement with Ocwen, regulators are finally beginning to gain traction in delivering the kind of relief needed for homeowners harmed by the conduct of banks and lenders in recent years.”
The principal reductions will go to families who are in default or at imminent risk of default and whose homes are underwater. In addition to principal reductions for homeowners, the settlement will include cash payments to homeowners who lost their homes to foreclosure between 2009 and 2012 and servicing reforms.
The settlement with the nation’s fourth-largest mortgage servicer follows a civil law enforcement investigation and initiative that includes state attorneys general, state mortgage regulators and the CFPB. The settlement terms address alleged 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 alleged misconduct resulted in premature and unauthorized foreclosures, violations of homeowners’ rights and protections, and the use of false and deceptive documents and affidavits, including robosigning.
The complaint alleged that Ocwen and its related companies engaged in improper servicing practices, including but not limited to: failing to apply payments made by borrowers accurately and in a timely manner; failing to maintain accurate account statements; charging consumers unauthorized fees for default-related services; and failing to provide accurate and timely information to borrowers seeking information about loss mitigation services.
The Ocwen settlement does not grant immunity from criminal offenses and would not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class-action civil cases. The agreement also preserves the authority of state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
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