Many borrowers who had mortgages serviced by Ocwen, which is the largest non-bank mortgage servicer in the country, received mortgage relief as a result of a national settlement that occurred in December of 2013. Under the settlement, certain borrowers received principal reductions or cash payments. Also, as a result of the settlement, Ocwen had to comply with specific mortgage servicing standards. Read on to learn more about the Ocwen national mortgage settlement.
An investigation into Ocwen’s foreclosure activities revealed extensive loan servicing misconduct, including (among other things):
To hold Ocwen accountable for these servicing violations, 49 state attorneys general, the District of Columbia, and the Consumer Financial Protection Bureau (CFPB) reached a settlement with Ocwen Financial Corp. and its subsidiary, Ocwen Loan Servicing, in December of 2013.
The settlement required Ocwen to provide the following forms of relief to eligible borrowers.
The settlement required Ocwen to pay $125 million to certain borrowers who went through a foreclosure between January 1, 2009 and December 31, 2012. To receive a cash payment, Ocwen or one of the companies purchased by Ocwen (Litton Loan Servicing LP and Homeward Residential Holdings LLC, which was previously known as American Home Mortgage Servicing, Inc. or “AHMSI”) must have been the loan servicer at the time of foreclosure. (The company that you make your monthly mortgage payment to is your mortgage servicer.)
Borrowers had to meet the following criteria.
Each successful claimant received an equal portion of the $125 million, which was around $1,150 per claimant.
The settlement also ordered Ocwen to provide $2 billion in principal reductions to eligible underwater borrowers who were at risk of foreclosure. To accomplish this, Ocwen offered write-down loan modifications to eligible borrowers. (A “write-down” loan modification reduces the principal balance on the loan. A lower principal balance results in lower monthly payments.)
Even though the required modifications under this settlement have been completed, if you're struggling to make your mortgage payments and Ocwen services your loan, you might qualify for a modification under a different program.
In addition, the settlement required Ocwen to comply with the standards for servicing loans that were developed as part of the national mortgage settlement involving Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo. While Ocwen's obligation to comply with the national mortgage settlement standards expired in early 2017, these standards are mostly included in the CFPB mortgage servicing rules that went into effect on January 10, 2014. (Learn more in Nolo’s article Federal Rules Protecting Homeowners With Mortgages.)
You can learn more about the Ocwen settlement at the CFPB’s website, and at https://nationalocwensettlement.com/mainpage/Home.aspx.
If you believe Ocwen is servicing your loan in an unfair or illegal manner, or Ocwen has started a foreclosure on your property, consider talking to a foreclosure attorney.