Tennessee Attorney General Bob Cooper announced today that Ocwen Financial Corporation of Atlanta, Georgia, and its subsidiary, Ocwen Loan Servicing, have agreed to a $2.1 billion joint state-federal settlement with Tennessee, 48 additional states and the District of Columbia, and the Consumer Financial Protection Bureau (CFPB).
The terms of the agreement 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 the complaint filed in the U.S. District Court for the District of Columbia today, 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 agreement 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 CFPB. Through a consent judgment filed today for the court's approval, the agreement holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to eligible homeowners through principal reduction and cash payments to eligible foreclosed borrowers, and stops future fraud and abuse.
"What we found in the Ocwen case is similar to a lot of the problems we saw in our other mortgage servicer enforcement cases," Attorney General Bob Cooper said. "This is part of our ongoing civil law enforcement effort to hold mortgage servicers, including Ocwen, accountable and ensure that they treat borrowers fairly."
Under the agreement, Ocwen agreed to $2 billion in first-lien principal reduction, and $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans nationwide. In Tennessee, Ocwen will provide troubled borrowers with an estimated $18.8 million in first-lien principal reductions, and the borrowers on 3,626 loans that were foreclosed 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.
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, which was 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 nationwide to distressed homeowners and created significant new servicing standards.
The Ocwen agreement 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.
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.
• Homeowners receive comprehensive new protections from new mortgage loan servicing and foreclosure standards.
• An independent monitor will oversee implementation of the settlement to ensure compliance.
• The government can pursue civil claims outside of the agreement, and any criminal case; borrowers and investors can pursue individual, institutional or class action cases regardless of the agreement.
• Ocwen pays $2.3 million for settlement administration costs.
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.
Borrowers should contact Ocwen at 800-337-6695 or ConsumerRelief@Ocwen.com to obtain more information about principal reductions and whether they qualify under the terms of this settlement. A settlement administrator will contact qualified borrowers associated with foreclosed loans regarding cash payments. More information will be made available as the settlement programs are implemented. For more information on the Ocwen agreement, visit www.tn.gov/attorneygeneral or www.CFPB.gov. For more information about free foreclosure prevention counselors or mortgage assistance programs in Tennessee, struggling homeowners may visit www.tn.gov/attorneygeneral or www.KeepMyTNHome.org or call the State of Tennessee's free Mortgage Assistance Hotline at (855) 876-7283 Monday-Friday, 9 a.m. to 5 p.m. CT.