Foreclosure Relief for Homeowners With Ocwen Mortgages

Ocwen, which is the largest non-bank mortgage servicer in the country, had to pay certain borrowers money under a national mortgage settlement.

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.

The Ocwen National Mortgage Settlement

An investigation into Ocwen’s foreclosure activities revealed extensive loan servicing misconduct, including (among other things):

  • robosigning (where foreclosure documents were signed by people who had no knowledge about whether the information contained in the documents was correct)
  • charging improper fees
  • providing false or misleading reasons for denying loan modifications, and
  • failing to honor in-process loan modifications agreed to by prior servicers.

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.

Relief Provided by the Settlement

The settlement required Ocwen to provide the following forms of relief to eligible borrowers.

Ocwen Provided Cash Payouts to Borrowers Who Lost Their Homes to Foreclosure

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.

  • You made at least three payments on the loan.
  • You lived or intended to live in the property as your principal place of residence at the time you took out the loan.
  • The property was a one to four unit residential property.
  • The unpaid principal balance of the first-lien was no more than $729,750 for a one-unit property, $934,200 for a two-unit property, $1,129,250 for a three-unit property, or $1,403,400 for a four-unit property.
  • You must have made a valid claim. (The settlement administrator mailed notice letters and claim forms to approximately 200,000 borrowers in June 2014. The deadline to submit a claim form has now passed and claims are no longer being accepted.)

Each successful claimant received an equal portion of the $125 million, which was around $1,150 per claimant.

Loan Modifications for Struggling Homeowners

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.

Ocwen Must Adhere to Certain Servicing Standards

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.)

More Information on the Ocwen Settlement

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.

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