Attorney General Peter F. Kilmartin today joined the federal Consumer Financial Protection Bureau (CFPB) and 48 additional attorneys general to announce a two billion dollar settlement with Ocwen Financial Corporation (Ocwen), and its subsidiary, Ocwen Loan Servicing, for its role in mortgage foreclosure abuses and deceptive mortgage servicing practices.
Under the terms of the settlement, Rhode Islanders can expect to see approximately $9.6 million in relief in the form of principal reductions and direct payments to those who have been foreclosed upon. The settlement covers Ocwen, and its acquired subsidiaries Litton Loan Servicing, LP and Homeward Residential, for the time period January 1, 2009 through December 31, 1012.
The settlement is the result of a massive civil law enforcement investigation and initiative that includes state attorneys general, state mortgage regulators and the CFPB. 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 "robo-signing."
Commenting on the settlement, Attorney General Kilmartin said, "As noted when we announced the landmark $25 billion National Mortgage Settlement in 2012, the settlement did not end our investigation into foreclosure and mortgage servicing abuses by big banks set on making profits with little concern for homeowners. This settlement with the nation's fourth largest mortgage service provider confirms my commitment to hold those responsible for the collapse of the housing market and record numbers of foreclosures in Rhode Island, and ensure that past bad practices do not occur in the future."
Nationally, Ocwen agreed to $2 billion in first-lien principal reductions and $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans in the states involved in the settlement.
In Rhode Island, Ocwen will provide troubled borrowers with an estimated $9.6 million in first lien principal reductions, and approximately 865 loans that were foreclosed upon may be eligible to receive a cash payment. The payment amount, which is contingent on the number of consumers who submit valid claims, is projected to be approximately $1,000.
Joseph A. Smith, Jr., monitor of the National Mortgage Settlement, will oversee the Ocwen agreement's implementation and compliance through the Office of Mortgage Settlement Oversight.
The National Mortgage Settlement, a three-year agreement 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 to distressed homeowners and created significant new servicing standards. The U.S. District Court in Washington, D.C. entered the consent judgments on April 5, 2012.
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.
Ocwen Agreement Highlights o Ocwen commits to $2 billion in first lien principal reduction. o Ocwen will pay $125 million cash to borrowers associated with 183,984 foreclosed loans. o Homeowners will receive comprehensive new protections from new mortgage loan servicing and foreclosure standards. o An independent monitor will oversee implementation of the settlement to ensure compliance. o The government can pursue civil claims outside of the agreement, as well as any criminal case; borrowers and investors can pursue individual, institutional or class action cases regardless of the agreement. o Ocwen pays $2.3 million for settlement administration costs.
Because of the complexity of the mortgage market and this agreement, which will span a three year period, in some cases Ocwen will contact borrowers directly regarding principal reductions. However, borrowers should contact Ocwen to obtain more information about principal reductions and whether they qualify under terms of this settlement. A settlement administrator will contact qualified borrowers associated with foreclosed loans regarding cash payments. More information will be made available as the settlement programs are implemented.
Additional information and FAQs about the settlement are available at http://www.riag.ri.gov/ocwen/.
Ocwen has established a toll-free number and email address for borrowers with questions. The number is 1-800-337-6695, and the email address is ConsumerRelief@Ocwen.com.
In addition, homeowners may also contact the Consumer Protection Unit of the Office of Attorney General at 401-274-4400 or by email at email@example.com.