Ocwen Financial Corp., based in West Palm Beach, has agreed to provide more than $11 million in cash and services to settle a lawsuit by Florida’s attorney general alleging widespread misconduct by its mortgage servicing business.
The settlement was announced in separate statements by the Attorney General’s Office and Ocwen.
It follows years of accusations from across the United States that Ocwen routinely abused its mortgage customers with, according to the attorney general’s 2017 civil complaint, illegal foreclosures, misapplied mortgage payments, failure to make insurance payments from borrowers' escrow accounts and overcharges to borrowers' accounts for default fees.
Even after agreeing in 2013 to clean up its practices, Ocwen continued its improper behavior, the complaint stated. It failed to properly credit borrowers with making on-time payments, resulting in late fees, negative credit reporting and inaccurately reported delinquencies. It misapplied payments and miscalculated loan balances and amounts due and communicated information to borrowers that it knew or should have known was inaccurate.
Ocwen will provide at least $8.6 million in consumer relief, including $2.1 million to Florida consumers harmed by the company’s alleged servicing failures, the attorney general’s statement said Thursday. Those failures include improperly imposing lender-placed insurance and overcharging for property inspections.
Ocwen will also provide at least $1 million for mortgage loan modifications and about $5.5 million in late fee waivers. The company also agreed to pay more than $3 million in civil penalties and reimbursement for the lawsuit’s fees and costs.
In a statement, Florida Attorney General Ashley Moody called the settlement “a continuation of our 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 — relief that is especially important in these challenging times.”
In its own statement, Ocwen stressed that its agreement to settle the case was not an admission of wrongdoing. “Ocwen believes that it has sound legal and factual defenses to all of the State of Florida’s claims 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,” the statement said.
For Ocwen, the settlement was the second in less than a decade with Florida’s top prosecutor.
In 2013, Florida was among 48 states and the federal Consumer Financial Protection Bureau that secured a $2 billion settlement with Ocwen over similar allegations. Then-Attorney General Pam Bondi said at the time that $342 million of the money would be sent to 26,000 Florida consumers, with each eligible to receive more than $1,000.
In that case, Ocwen also was accused of using false and deceptive documents and affidavits, including signing documents without reviewing them, known as “robo-signing."
A large number of U.S. banks were accused of robo-signing mortgage foreclosure documents during the huge wave of foreclosures that followed the 2008 economic crash.
The lawsuit that Bondi’s office filed against Ocwen in April 2017 referenced the company’s continued behavior since the $2 billion settlement, saying, “Despite multiple lawsuits and regulatory actions by various state attorneys general, state regulators and federal agencies, the Ocwen defendants continue to violate federal and state laws and industry standards.”
The complaint added that Ocwen failed to adequately respond to customer complaints and requests for loss mitigation.
Borrowers eligible for relief are not required to contact Ocwen or the Attorney General’s Office. Borrowers eligible for a monetary payment will be contacted by the office. In addition, about 6,000 borrowers will automatically receive late fee waivers from Ocwen.
Borrowers eligible for debt forgiveness will be offered loan modifications that will include reductions of their mortgage balances “or other forms of debt forgiveness.” Ocwen must forgive at least $1 million in debt within two years to avoid an additional $1 million penalty.
Additionally, Ocwen will set up a dedicated phone line for Florida borrowers to submit complaints and will establish a specific timeframe for resolving them.
Ocwen’s statement about the settlement said the amount of money and resources it agreed to commit “is not material to its financial condition.”