Ocwen Financial Corp. has agreed to a $30 million whistleblower lawsuit settlement in two claims alleging that the West Palm Beach, Fla.-based mortgage company violated the False Claims Act.

Under the settlement, Ocwen will pay $15 million to the federal government and $15 million to cover the attorneys’ fees and costs incurred by the private citizens who brought forth the loan fraud case, the company noted in a regulatory filing.

The whistleblower lawsuit settlement is subject to final approval by the government. Additionally, Ocwen will not admit any liability or wrongdoing as part of the settlement but the U.S. Justice Department approval may take between 30 and 60 days, according to the proposed order.

“Ocwen agreed to the settlement, notwithstanding its belief that it has sound legal and factual defenses, in order to avoid the uncertain outcome of two trials and the additional expense and management time involved,” the company said in its filing.

“There can be no assurance that the settlement in principle will be finalized and approved by the United States and the Court. In the event the settlement in principle is not ultimately finalized and approved, the Fisher Cases would continue and we would vigorously defend the allegations made against Ocwen.”

Ocwen also said that it planned the $30 million charge associated with the settlement because the company believes “this amount is both probable and reasonably estimable based on current information.”

If approval is received, Ocwen will be able to put one of its most major legal hurdles behind it. The loan fraud lawsuit alleges that the company provided false information in connection with its participation in the U.S. Treasury’s HAMP and FHA insurance programs.

The Ocwen whistleblower lawsuit was initiated by Michael F., who was employed in the area of loan modification from 2008 until early 2012. During that time, he served as an assistant to attorneys at law firms in California and Texas. Those attorneys assisted clients with obtaining modifications of their residential property mortgage loans from Ocwen and other lenders.

As a part of his job, Michael regularly reviewed loan modification contracts for each law firm. Additionally, he reviewed and received hundreds of modification contracts from other law firms and companies. Between 2008 and 2011, Michael alleges that Ocwen and its subsidiaries modified 200,000 home loan modifications.

In his whistleblower lawsuit, Michael alleged that Ocwen violated disclosures required by the Truth in Lending Act (“TILA”) while servicing subprime mortgages under the Home Affordable Modification Program (“HAMP”).

In 2009, the U.S. Treasury Department rolled out the HAMP program to encourage lenders to modify home-secured loans. Under HAMP, loan service providers and borrowers received payments from the government in connection with granting the modification and keeping modified payments current.

Michael alleged that Ocwen falsely certified its full compliance with HAMP regulations. Ocwen made false certifications that were material to payment by the United States.

Filing a Whistleblower Lawsuit

The False Claims Act (“FCA”) is a federal statute that allows whistleblowers, or “relators,” to bring qui tam action (lawsuits) on behalf of the United States government and against their employers who are committing frauds against the government.

These qui tam lawsuits are filed “under seal” and the government has 60 days to elect to intervene. If the qui tam action is successful, and the government recovers money from a fraudulent contractor, the whistleblower who is the source of the information stands to take-home a considerable portion of the government’s recovery.

If you have knowledge of fraud committed against the government, such as loan fraud or healthcare fraud, consulting an experienced whistleblower attorney or an attorney who specializes in the False Claims Act can help evaluate and guide your potential whistleblower claim.

The Ocwen Whistleblower Lawsuit is Case No. 4:12-cv-00543, in the U.S. District Court for the Eastern District of Texas.