A.G. Schneiderman Announces National Multi-Billion Dollar Settlement With Mortgage Servicing Giant OCWEN Financial Services
Close To $300 Million In Mortgage Forgiveness Will Go Directly To New Yorkers Struggling To Avoid Foreclosure
NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with mortgage servicing giant Ocwen Financial Services over alleged improprieties by the company and its subsidiaries related to mortgage servicing and foreclosure practices. The national settlement, the result of a joint investigation by the Consumer Financial Protection Bureau, state banking regulators, and 49 state attorneys general, will bring more than $2 billion in relief to consumers in all 50 states. New York is expected to fare particularly well, with $292,716,793 in first-lien principal reductions going to homeowners across the state.
"While recent actions have brought much-needed relief to thousands of New Yorkers since the collapse of the housing market, far too many homeowners still face unnecessary challenges as they fight to stay in their homes,” said Attorney General Schneiderman. “Today’s settlement with Ocwen, led by the Consumer Financial Protection Bureau and a coalition of states, will bring nearly $300 million in relief to homeowners across our state—a critical lifeline for New Yorkers who have lost their homes or are suffering through a burdensome process to keep them. From the 2012 National Mortgage Settlement and last month’s historic JP Morgan agreement to today’s $2 billion settlement with Ocwen, regulators are finally beginning to gain traction in delivering the kind of relief needed for homeowners harmed by the conduct of banks and lenders in recent years.”
The principal reductions will go to families who are in default or at imminent risk of default and whose homes are underwater. Thus, the benefits will be targeted to those who are most at risk and stand the greatest chance of avoiding foreclosure as a result of this relief. In addition to principal reductions for homeowners, the settlement will include cash payments to homeowners who lost their homes to foreclosure between 2009 and 2012 and a slate of servicing reforms aimed at improving customer service practices.
Kirsten Keefe, senior attorney at the Empire Justice Center, said, “It is very exciting that this settlement will bring nearly $300 million in principal reduction to New York homeowners with mortgage loans serviced by Ocwen. Principal reduction has been a key piece missing from the housing recovery puzzle. The Attorneys General, the CFPB and the state banking regulators are to be commended for coming together to help break the logjam in the foreclosure crisis.”
The settlement with the nation’s fourth-largest mortgage servicer is the result of a massive civil law enforcement investigation and initiative that includes state attorneys general, state mortgage regulators and the CFPB. The settlement terms address servicing misconduct by Ocwen and two companies later acquired by Ocwen, Homeward Residential Inc. and Litton Home Servicing LP. Ocwen specializes in servicing high-risk mortgage loans.
According to a complaint filed in the U.S. District Court for the District of Columbia, the misconduct resulted in premature and unauthorized foreclosures, violations of homeowners’ rights and protections, and the use of false and deceptive documents and affidavits, including robosigning.
The investigation also found Ocwen and its related companies engaged in improper servicing practices, including but not limited to: failing to apply payments made by borrowers accurately and in a timely manner; failing to maintain accurate account statements; charging consumers unauthorized fees for default-related services; and failing to provide accurate and timely information to borrowers seeking information about loss mitigation services.
The settlement brings additional hope for Winston and Norma Rose, a retired couple who have owned a home in East New York, Brooklyn, since 1959. Mr. Rose retired from his teaching job in the public school system in 1993. In 2007, he refinanced their two-family home in order to pay for necessary repairs. When their tenant started having trouble paying rent, the Roses reached out to their lender to seek a loan modification. They have been desperately trying to negotiate with the mortgage servicers ever since. This year, Ocwen took over the servicing of their loan, but the Roses are still struggling to get relief.
Mrs. Rose, 75, said, “For five years now, we have lived in fear of losing the only home we've ever known. The anxiety and frustration had taken a toll on us. We are hopeful that Ocwen Loan Servicing will be able to put an end to this nightmare.”
Josh Zinner, co-director of the New Economy Project, said, “We thank the Attorney General for his ongoing efforts to hold banks and mortgage servicers accountable to communities. Abusive servicing practices have caused great harm to New York homeowners and communities for many years. We hope the focus on first lien principal reduction in this settlement means that most of the relief will go toward keeping people in their homes with affordable modifications.”
The Ocwen settlement does not grant immunity from criminal offenses and would not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class-action civil cases. The agreement also preserves the authority of state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.