If you have or had a mortgage serviced by Ocwen, which is the largest non-bank mortgage servicer in the country, you might get mortgage relief due to a settlement that occurred in December of 2013. Under the settlement, certain borrowers with mortgage loans that are currently serviced by Ocwen are eligible for principal reductions and, if you lost your home to foreclosure and Ocwen (or a company purchased by Ocwen) was the servicer at the time of the foreclosure, you may be entitled to receive a cash payment.
Read on to learn more about the Ocwen settlement, who is eligible for relief under the settlement, and the types of relief available if you qualify.
An investigation into Ocwen’s foreclosure activities over the past several years 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 requires Ocwen to provide the following forms of relief to eligible borrowers.
The settlement requires Ocwen to pay $125 million to certain borrowers who went through a foreclosure between January 1, 2009 and December 31, 2012.
Who can benefit. 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 your loan servicer at the time of foreclosure. (The company that you make your monthly mortgage payment to is your mortgage servicer.)
You must also meet all of the following criteria.
Amount of the payout. Each successful claimant will receive an equal portion of the $125 million. The amount is expected to be around $700 per claimant, though the actual amount will vary based on how many claims are filed.
Other claims. You do not have to release any claims and are free to seek additional relief in the courts (for example, you can still file a lawsuit) even if you receive a payment under the settlement.
The settlement also orders Ocwen to provide $2 billion in principal reductions to eligible underwater borrowers who are at risk of foreclosure. To accomplish this, Ocwen will offer 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.)
Who can benefit. To be eligible, Ocwen must currently service your loan. (To find out who your mortgage servicer is, look at your mortgage payment coupon. You can also call Ocwen at 800-337-6695 to find out if it is your servicer.)
Notification. Ocwen will notify borrowers who are eligible for loan modifications. However, if Ocwen is your loan servicer, you are encouraged to call the company directly to find out if you are eligible. The settlement does not indicate which borrowers will get modifications so it may be in your best interest to be proactive in finding out if you are eligible under the settlement.
In addition, the settlement requires Ocwen to comply with the standards for servicing loans found in the National Mortgage Settlement. (Learn more in Nolo’s article National Mortgage Settlement: New Rules Help Protect Homeowners in Foreclosure.)
Ocwen must also comply with further consumer protections. For example:
(These standards are in addition to the new CFPB mortgage servicing rules that went into effect on January 10, 2014. Learn more in Nolo’s article New Federal Rules Protecting Homeowners With Mortgages.)
You can learn more about the Ocwen settlement at the CFPB’s website, at https://nationalocwensettlement.com/mainpage/Home.aspx, or by contacting Ocwen at 800-337-6695. You may also send an email to ConsumerRelief@Ocwen.com.