Ocwen reaches $225 million settlement for violations that ‘hammered borrowers’
By Ron Trujilloemail@example.com
Ocwen reached a $225 million settlement Friday with the California Department of Business Oversight, allowing the mortgage servicer to handle new mortgages in the state.
The settlement follows a third-party audit that determined Ocwen committed “hundreds of violations of state and federal laws and regulations,” including the California Homeowner Bill of Rights, according to the state.
The servicing practices and compliance audits covered the period of January 2012 through June 2015. Ocwen serviced more than 531,000 California borrowers during that three-year period.
Under the settlement, Ocwen must pay $20 million for borrower restitution and pay $198 million of debt forgiveness over three years. The debt forgiveness will be provided through loan modifications, according to the state.
Ocwen will pay $25 million in cash, $20 million for borrower restitution, and $5 million for penalties, attorney fees and the cost of an administrator to oversee the restitution payments.
‘The terms will hold Ocwen accountable for widespread violations of laws that hammered borrowers in our state.’ Jan Lynn Owen, California Department of Business Oversight commissioner
The settlement also requires Ocwen to pay additional restitution to California borrowers harmed by the company’s so-called “letter-dating” problem, according to the state. The company mailed time-sensitive documents to borrowers after the date on the letter, often by many days. The delay affected some borrowers’ ability to obtain loan modifications.
According to the state, Ocwen estimates paying $2 million to 3,127 homeowners affected by the letter-dating issue. Ocwen must also review claims from another 19,295 affected homeowners and pay restitution, if eligible.
“This is a fair and just settlement for California consumers,” says Jan Lynn Owen, Department of Business Oversight commissioner. “The terms will hold Ocwen accountable for widespread violations of laws that hammered borrowers in our state.”
Photo courtesy of Jeff Turner via @Flickr.