Settlement Provides Direct Relief to Homeowners, and Stops Future Servicing Abuse
Phoenix, AZ (Thursday, December 19, 2013) – Attorney General Tom Horne is today announcing a settlement reached with Ocwen Financial Corporation of Atlanta, Georgia, and its subsidiary, Ocwen Loan Servicing. The company has agreed to a $2.1 billion dollar joint state-federal Settlement with Arizona, 48 additional states and the District of Columbia, and the Consumer Financial Protection Bureau (CFPB).
In Arizona, Ocwen is expected to provide troubled borrowers with as much as $20.7 million in first lien principal reductions. In addition, Ocwen will make payments directly to foreclosed borrowers and is expected to solicit approximately 10,300 Arizona borrowers who may be eligible for these payments. The payment amount, which is contingent on the number of consumers who submit valid claims, is projected to exceed $1,000 per foreclosed loan.
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. As a result of the Settlement, Ocwen is now required to comply with tough new mortgage loan servicing standards. Nationally, Ocwen agreed to $2 billion in first lien principal reduction, and $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans.
“What we found in the Ocwen case is similar to a lot of the problems we saw in our other mortgage servicer enforcement cases,” said Attorney General Horne “This is part of our ongoing civil law enforcement effort to hold servicers, including Ocwen, accountable and ensure that they treat borrowers fairly.”
According to a complaint filed in the U.S. District Court, 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.
The Settlement with the nation’s fourth-largest mortgage servicer is the result of a joint civil law enforcement investigation and initiative that includes state attorneys general, state mortgage regulators and the CFPB. The Settlement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases. None of the participating states, including Arizona, received direct payments under this Settlement.
Ocwen Agreement Highlights:
- Ocwen commits to $2 billion in first lien principal reduction.
- Ocwen pays $125 million cash to borrowers associated with 183,984 foreclosed loans.
- Ocwen must follow comprehensive new mortgage loan servicing and foreclosure standards.
- An independent monitor will oversee implementation of the Settlement to ensure compliance.
- Homeowners 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, in the form of a consent judgment, will be filed in U.S. District Court in Washington, D.C. Once approved by a judge, it will have the authority of a court order.
Borrowers whose loans are serviced by Ocwen may contact Ocwen at 1-800-337-6695 or by e-mail at ConsumerRelief@Ocwen.com to obtain more information about principal reductions and whether they qualify under terms of this Settlement. In some cases Ocwen will contact borrowers directly regarding principal reductions. A third party Settlement administrator will contact borrowers who may be qualified for foreclosed borrower payments.
Consumers with mortgage settlement questions may contact: