The nation’s largest nonbank mortgage loan servicer, Ocwen Financial Corp., and its subsidiary, Ocwen Loan Servicing, will provide $2 billion in principal reduction to “underwater” borrowers as part of a consent order to settle “systemic misconduct at every stage of the mortgage servicing process,” state and federal authorities said Thursday.
Ocwen must also refund $125 million to the nearly 185,000 borrowers who have already been foreclosed upon.
Ocwem also has to adhere to “significant new homeowner protections,” according to the Consumer Financial Protection Bureau (CFPB), authorities in 49 states, and the District of Columbia — all of which filed a complaint against Ocwen.
Among the allegations: Deceiving consumers about foreclosure alternatives and improperly denying loan modifications.
Ocwen must refund the $125 million to consumers whose loans were being serviced by Ocwen, Homeward Residential Holdings, or Litton Loan Servicing, and who lost their homes to foreclosure between Jan. 1, 2009 and Dec. 31, 2012.
All eligible consumers who submit valid claims will receive an equal share of the $125 million.
Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Ocwen will also pay $2.3 million to administer the refund process. Eligible consumers can expect to hear from the settlement administrator about potential payments.
Ocwen, a publicly traded Florida corporation headquartered in Atlanta, Ga., is the fourth-largest servicer overall in the United States.
Ocwen allegedly violated the law at many levels, the CFPB said, including:
- Failing to timely and accurately apply payments made by borrowers and failing to maintain accurate account statements;
- Charging borrowers unauthorized fees for default-related services;
- Imposing force-placed insurance on consumers when Ocwen knew or should have known that they already had adequate home-insurance coverage; and
- Providing false or misleading information in response to consumer complaints.
See common consumer questions and answers about the order.