Ocwen to Provide $2.1 Billion in Relief to Homeowners in State-Federal Settlement Over Loan Servicing Misconduct
Mortgage Servicer to Provide Massachusetts Homeowners Relief Totaling $80 Million; Agreement Includes Principal Reduction, New Servicing Standards
BOSTON – The nation’s fourth largest mortgage servicer has agreed to provide Massachusetts homeowners with an estimated $80 million in principal reduction and cash payments to homeowners as part of a national settlement to resolve claims of loan servicing misconduct and unlawful foreclosures, Attorney General Martha Coakley announced today.
A $2.1 billion joint state and federal settlement with Ocwen Financial Corporation of Atlanta, Georgia, and its subsidiary, Ocwen Loan Servicing, was reached today with a total of 49 states and the District of Columbia, and the Consumer Financial Protection Bureau (CFPB).
“After initiating thousands of illegal foreclosures nationwide, this settlement will ensure that future fraud and abuse from this mortgage servicer will be prohibited,” AG Coakley said. “We are pleased that Massachusetts homeowners who were foreclosed upon will receive relief under this agreement.”
The national settlement, filed today along with the complaint in the U.S. District Court for the District of Columbia, addresses servicing misconduct by Ocwen, and two companies later acquired by Ocwen, Homeward Residential Inc. and Litton Home Servicing Limited Partnership (Litton). Ocwen specializes in servicing high-risk mortgage loans. The settlement is the result of a massive civil law enforcement investigation and initiative that includes state attorneys general, state mortgage regulators, and the CFPB.
According to the complaint filed by AG Coakley and other regulators, 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.”
Under the national settlement, Ocwen has agreed to provide $2 billion in first-lien principal reduction on loans serviced by Ocwen in Massachusetts and 48 other states, and $125 million for cash payments to borrowers nationwide on nearly 185,000 foreclosed loans.
In Massachusetts, Ocwen will provide troubled borrowers with an estimated $79 million in first lien principal reductions, and about 2,600 loans will be eligible to receive a cash payment. The payment amount, which is contingent on the number of consumers who submit valid claims, is projected to exceed $1,000.
An independent monitor will oversee implementation of the settlement to ensure compliance. Other highlights of the agreement include providing homeowners with comprehensive new protections from new mortgage loan servicing and foreclosure standards.
The final agreement, through a consent judgment, will be filed in U.S. District Court in Washington, D.C. If approved by a judge, it will have the authority of a court order.
The National Mortgage Settlement, an agreement announced in February 2012, involving the nation’s five largest mortgage servicers and their connection with unlawful foreclosures and loan servicing has so far provided more than $51 billion in relief to distressed homeowners and created significant new servicing standards. The servicers in that settlement indicate that they have provided more than $620 million in relief to Massachusetts borrowers in addition to making a direct payment of more than $44.5 million to the Commonwealth, used in part to establish the AG’s HomeCorps program and offer grants aimed at helping to mitigate the impact of the foreclosure crisis.
The case is being handled for Massachusetts by Assistant Attorneys General Glenn Kaplan and Peter Leight, and paralegal Erica Harmon of Attorney General Martha Coakley’s Insurance and Financial Services Division, with Assistant Attorneys General Amber Villa, Justin Lowe and Stephanie Kahn of AG Coakley’s Consumer Protection Division.