Major Mortgage Servicer In $2 Billion Order Over Deceptive Practices

by Categorized: Mortgage Fraud Settlement, Uncategorized Date:

A major loan servicer would have to finance $2 billion in principal reductions for “underwater” homeowners nationwide — including $39 million in Connecticut — under an agreement with federal and state authorities over mortgage servicing wrongdoing.

Ocwen Financial Corp. and its servicing subsidiary, Ocwen Loan Servicing, also must refund $125 million to nearly 185,000 borrowers who were already lost their homes to foreclosure. According to the Connecticut attorney general’s office, about 1,600 of those borrowers are in Connecticut.

Ocwen is the largest “non-bank” servicer in the country and the fourth-largest overall.

The agreement is part of a proposed consent order involving the federal Consumer Financial Protection Bureau and authorities in 49 states. The order is in addition to the $25 billion settlement in early 2012 with major mortgage servicers, following the “robo-signing” scandal.

“This settlement with Ocwen continues the important work of the 2012 National Mortgage Settlement and, while we cannot prevent every foreclosure, this will extend opportunities for relief to thousands of Connecticut borrowers,” Connecticut Attorney General George Jepsen said.

Richard Cordray, the financial protection bureau’s director, said deceptions and short cuts in servicing will not be tolerated.

“Ocwen took advantage of borrowers at every state of the process,” Cordray said. “Today’s action sends a clear message that we will be vigilant about making sure that consumers are treated with respect, dignity and fairness they deserve.”

Ocwen did not immediately return a response to an email.

An investigation by federal and state authorities found that Ocwen pushed some homeowners into foreclosure because of servicing errors; charged unauthorized fees; failed to provide accurate information about loan modifications and other services to keep borrowers in their homes; and signing foreclosure documents without verifying their accuracy.

Jepsen said the settlement will be overseen by an independent monitor. Ocwen may contact some borrowers directly about principal reductions, but Jepsen advised borrowers to contact Ocwen for more information and whether they qualify. Borrowers can contact Ocwen by phone at 1-800-337-6695 or by email at ConsumerRelief@Ocwen.com

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