Foreclosure Relief for Homeowners With Ocwen Mortgages

Do you have an Ocwen mortgage? Learn about foreclosure relief for homeowners with Ocwen mortgages.

By , Attorney · University of Denver Sturm College of Law

Ocwen Financial Corporation is one of the largest nonbank mortgage servicing companies in the United States. In past years, Ocwen has been the subject of several regulatory actions and lawsuits, accusing the company of violating loan servicing and foreclosure laws.

So, depending on the situation, if you have an Ocwen mortgage (or one serviced by a subsidiary), you might be able to make claims against Ocwen or the current loan servicer for illegal practices related to handling your mortgage loan. You could have a defense to the foreclosure if the company violated state or federal mortgage servicing or foreclosure laws.

Also, if you're having trouble making your mortgage payments, you can apply for loss mitigation.

What Is Ocwen?

Ocwen is a company founded in 1988 to provide residential mortgage servicing services, focusing on servicing subprime and defaulted loans, where borrowers were more likely to have financial hardships or trouble making payments. Since the company was started, Ocwen personnel frequently interacted with borrowers who were delinquent or were at risk of becoming delinquent on their mortgage loans and needed loss mitigation assistance. In these interactions, Ocwen often failed to provide meaningful assistance.

As a result, Ocwen has faced multiple allegations of servicing violations over the years. For example, in 2012, the Consumer Financial Protection Bureau (CFPB), 49 states, and the District of Columbia sued Ocwen for loan servicing violations under federal and state law. The case was settled in December 2013, and many borrowers with mortgages that Ocwen serviced received mortgage relief in the form of principal reductions or cash payments. (See below for more information on the Ocwen National Mortgage Settlement.)

However, despite this multibillion-dollar settlement, several lawsuits and settlements have alleged that Ocwen continued to skirt the law when servicing mortgage loans.

What Happened to Ocwen? (Who Is Ocwen Now?)

Now, Ocwen Financial Corporation services and originates mortgage loans through its subsidiaries PHH Mortgage and Liberty Reverse Mortgage. Ocwen has all but stopped using the name "Ocwen."

How Do I Know If I Have an Ocwen Mortgage?

If you have a PHH Mortgage or Liberty Reverse Mortgage, you have an Ocwen mortgage.

How Do I Apply for Foreclosure Relief From Ocwen?

To get foreclosure relief, you must apply through your loan servicer, likely PHH Mortgage or Liberty Reverse Mortgage. Generally, you must apply to the company's home retention department (sometimes called a "loss mitigation" department).

What Are the Eligibility Requirements for Foreclosure Relief From Ocwen?

Depending on your circumstances and goals, you might qualify for a forbearance, repayment plan, or loan modification. For example, you might qualify for a modification like a Fannie Mae or Freddie Mac Flex Modification if either one of those entities owns your loan or a proprietary (in-house) modification.

Generally, to be eligible for a loan modification, you must have experienced a financial hardship, such as the death of an income-earning co-borrower, or a divorce with an associated loss of household income, and have sufficient income to make modified payments. However, the exact criteria to qualify for loss mitigation varies depending on the program, investor requirements, and your circumstances.

If you want to give up the property but avoid a foreclosure, you might qualify for a short sale or deed in lieu of foreclosure. The requirements for qualifying for either of these options also vary depending on the situation. Again, contact your loan servicer to find out what foreclosure alternatives are available to you.

The Ocwen National Mortgage Settlement

An investigation into Ocwen's foreclosure activities during the foreclosure crisis revealed extensive loan servicing misconduct, including:

  • robosigning (where foreclosure documents were signed by people who didn't know 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 CFPB reached a settlement with Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, in December 2013.

Relief Provided by the Ocwen National Mortgage 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 specific 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.

Borrowers had to meet specific criteria to get a payout. Each successful claimant received an equal portion of the $125 million, 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 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.)

Ocwen Had to Adhere to Certain Servicing Standards

In addition, the settlement required Ocwen to comply with the standards for servicing loans 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 federal laws that took effect on January 10, 2014.

You can learn more about the Ocwen settlement at the CFPB's website and on the settlement website.

Why Is the Ocwen Settlement Relevant Today?

Even after the settlement, Ocwen and its main successor, PHH Mortgage Corporation, have allegedly continued to violate the law when servicing mortgage loans, as evidenced by numerous regulatory actions and lawsuits against the company.

How Can I Get Help With Foreclosure Relief From Ocwen?

So, if Ocwen or an Ocwen subsidiary currently services your mortgage and you think you're being treated unfairly or illegally—particularly if you're in foreclosure—you should talk to a lawyer as soon as possible.

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