Ocwen Financial Corp. will reduce struggling borrowers' loan balances by $2 billion in an agreement with federal regulators and 49 states over foreclosure abuses.
Federal and state officials announced the deal Thursday with the Atlanta-based company. Regulators said Ocwen pushed borrowers into foreclosure through illegal actions, such as failing to promptly and accurately credit mortgage payments.
Under the agreement, Ocwen also will refund a combined $125 million to about 185,000 borrowers who have been foreclosed upon. The company also agreed to change the way it manages mortgages. The company must stop "robo-signing" of documents, the practice of automatically signing off on foreclosures without a proper review.
In Tennessee, Ocwen will provide troubled borrowers with an estimated $18.8 million in first-lien principal reductions, and borrowers on mor ethan 3,600 loans that were foreclosed will be eligible to receive a cash payment. The payment amount is expected to top $1,000 per homeowner, according to Tennessee Attorney General Bob Cooper.
The agreement with the nation's fourth largest mortgage servicer is the result of a civil law enforcement investigation that includes state attorneys general, state mortgage regulators and the federal Consumer Financial Protection Bureau.
Through a consent judgment filed today for the court's approval, the agreement holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to eligible homeowners through principal reduction and cash payments to eligible foreclosed borrowers and takes steps to prevent future fraud and abuse.
"What we found in the Ocwen case is similar to a lot of the problems we saw in our other mortgage servicer enforcement cases," Attorney General Bob Cooper said. "This is part of our ongoing civil law enforcement effort to hold mortgage servicers, including Ocwen, accountable and ensure that they treat borrowers fairly."
Joseph A. Smith, Jr., monitor of the National Mortgage Settlement, will oversee the Ocwen agreement's implementation. The National Mortgage Settlement, which was reached in 2012 with the attorneys general of 49 states and the District of Columbia, the federal government, and five mortgage servicers (Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo), has so far provided more than $51 billion in relief nationwide to distressed homeowners and created significant new servicing standards.
The Associated Press contributed to this report.
IF YOU WERE AFFECTED
Borrowers should contact Ocwen at (800) 337-6695 or ConsumerRelief@Ocwen.com to obtain more information about principal reductions and whether they qualify under the terms of this settlement.