Jessica M. Semins  |  October 24, 2020

Category: Fees

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Mortgage application with keys to house

A proposed settlement between the state of Florida and mortgage servicer and originator Ocwen Financial Corp. calls for the company to provide more than $11 million in relief to its Florida customers.

Per the terms of the proposed settlement, Ocwen is to pay the state of Florida more than $5 million to resolve the state’s lawsuit alleging improper mortgage servicing practices.

According to a news release from Florida Attorney General Ashley Moody,  a proposed final judgment totaling more than $11 million — some $5.5 million of that figure will be provided to borrowers in late fee waivers  — brings to an end the 2017 lawsuit filed against Ocwen. The proposed judgment also includes an additional $1 million in mortgage loan modifications for Florida borrowers and more than $3 million in civil penalties as well as reimbursement to the Attorney General Office for fees and costs.

The parties agreed to the settlement on Oct. 15. and are awaiting a federal judge’s approval. The Ocwen mortgage processing fee lawsuit was consolidated with a separate lawsuit brought by the Consumer Financial Protection Bureau.

The state had accused Ocwen of making “various errors in the course of servicing residential mortgage loans, including failing to accurately onboard loans onto its system of record, mishandling borrowers’ escrow accounts, overcharging borrowers’ accounts and sending misleading communications about borrowers’ accounts.”

In a statement, Ocwen defended its practices but “concluded that it is in the best interest of its stakeholders to resolve this matter without admitting liability in order to avoid the further distraction and expense of litigation” and insisted that “Ocwen’s servicing practices have and continue to result in substantial benefits to consumers.”

Moody’s statement said that the resolution shows the state’s efforts to “correct harmful deficiencies in mortgage servicing practices and ensure that distressed homeowners who have been impacted by servicing errors receive much-needed relief.”

What Was Ocwen’s Alleged Financial Misconduct?

According to the lawsuit, Ocwen serviced thousands of loans based on inaccurate and incorrect information, stemming from problems with its record system, REALServicing. The database’s failure purportedly resulted in the processing of more than 1 million unverified Residential Capital loans. Ocwen allegedly resorted to manually processing the loans, further compounding the problems with deficiencies in servicing the loans. The suit says that 72% of the verified loans contained errors in April 2014, rising to 90% in March 2016.

The suit also alleged that Ocwen failed to properly credit full payments made by borrowers, resulting in late fees, inaccurate reporting, and harm to the customers’ credit scores. Consumers may want to check their credit reports to see if their scores have been impacted. Additionally, Ocwen reportedly failed to generate accurate escrow amounts, made errors in handling borrowers’ hazard insurance payments, and failed to cancel borrowers’ private mortgage insurance in a timely manner.

Allegations concerning Ocwen’s marketing were also raised in the lawsuit, claiming the loan servicer disseminated misleading solicitations in an effort to enroll customers in add-on products.

The mortgage processing fee lawsuit further alleged that Ocwen failed to protect borrowers and engaged in wrongful foreclosure practices, deceptively communicating that borrowers could provide Ocwen with additional information for the servicer to evaluate and mitigate loss. Despite requesting the information, Ocwen would foreclose on the borrowers while the lost mitigation applications were still pending, according to the claims raised.

Lawsuit settlement papers getting signedHow Do Borrowers Benefit from the Ocwen Mortgage Lawsuit Settlement?

The terms of the Ocwen mortgage lawsuit settlement state that $2.15 million will be allotted to Florida borrowers to resolve claims that Ocwen failed to make insurance payments for borrowers’ escrow accounts. In addition to the $5.5 million in waived fees, Ocwen will pay $1 million in civil penalties, $10,000 in administrative fines, and $2 million in attorneys’ fees.

If the proposed judgment is signed by the judge, Florida borrowers whose accounts are in foreclosure or bankruptcy, or are delinquent by no more than 60 days as of the effective date, will also be entitled to late fee waivers. An estimated 6,600 Ocwen mortgage accounts would benefit from this settlement provision.

The loan servicer would also be required to send a solicitation offer to review the accounts of at least 3,400 Florida accounts eligible for a loan modification. If Ocwen fails to send the offer and provide at least $1 million in debt forgiveness through loan modifications, it will be subject to an additional $1 million penalty.

According to the Florida Attorney General’s Office, those who are eligible for monetary payment do not need to take action to obtain the relief — they will be contacted by the state and Ocwen will automatically apply for the late fee waiver. Those who are eligible for the loan modifications will be contacted by Ocwen subsidiary PHH Mortgage.

The settlement doesn’t bar any further relief Ocwen mortgage borrowers might be entitled to receive pursuant to any agreement reached with the Consumer Financial Protection Bureau.

The Ocwen Mortgage Lawsuit is Consumer Financial Protection Bureau v. Ocwen Financial Corp. Inc. et al., Case No. 9:17-cv-80495, and Office of the Attorney General et al. v. Ocwen Financial Corp. et al., Case No. 9:17-cv-80496, in the United States District Court for the Southern District of Florida.

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This article is not legal advice. It is presented
for informational purposes only.

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23 thoughts onOcwen Mortgage to Pay Millions in Relief to Borrowers

  1. Shelby Watson says:

    My grandparents were dirt poor they didn’t have a fixed interest rate they paid this house off 3 times before they died I the granddaughter hired a lawyer they refused to work with me or any of my family or lawyer to get the house legally but let us get it out of foreclosure and 4 yrs later me and my husband are still paying the mortgage with my grandparents dead! They know we have lived here for 4 yrs but play dumb just to get money every month I will be getting a lawyer because legally it will never be in our name because they refused to do their job!

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