California homeowners eligible to receive an estimated $268 million in first lien principal reductions and nearly $23 million in cash payments
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SAN FRANCISCO – Attorney General Kamala D. Harris recently announced a $2.1 billion multistate and federal settlement with Ocwen Financial Corporation and Ocwen Loan Servicing, LLC (Ocwen) over alleged mortgage servicing misconduct.
The settlement makes California homeowners eligible to receive up to $268 million in first lien principal reductions and nearly $23 million in cash payments to borrowers.
“This settlement will help homeowners who’ve been misled while trying to modify their Ocwen mortgages,” said Harris. “But our work isn’t done. Too many California families are still coping with uncooperative banks and mortgage service providers. My office will continue to fight on their behalf.”
The settlement resolves allegations that Ocwen engaged in robo-signing, “dual tracking” of borrowers seeking loan modifications and other misconduct in the course of its mortgage servicing activities. The settlement also resolves similar allegations against Homeward Residential, Inc. and Litton Loan Servicing, LP, which Ocwen acquired.
Ocwen holds nearly 390,000 loans in California, of which 12 percent are underwater. Ocwen holds approximately 6 percent of all California underwater loans.
The national settlement requires Ocwen to pay $125 million to borrowers whose homes were foreclosed between 2009 and 2012 and commit to $2 billion in first lien principal reduction loan modifications over the next three years. The Consumer Financial Protection Bureau was the lead agency for the negotiations. The settlement was signed by 49 states and the District of Columbia, including California.
Joe Smith, who served as the Monitor for last year’s National Mortgage Settlement, will monitor the settlement nationally and Katie Porter, who heads the California Monitor’s office, will monitor the settlement in California.
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.
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.
The settlement is the latest in a series of actions taken by Harris and the California Department of Justice against bad lending practices in California.
In February 2012, Harris secured a commitment from the nation’s five largest banks which has resulted in more than $20 billion for struggling California homeowners. Following the settlement, Harris sponsored the California Homeowner Bill of Rights, a landmark package of legislation that restricts dual-track foreclosures, guarantees struggling homeowners a reliable point of contact at their lender and imposes civil penalties on fraudulently signed mortgage documents. In addition, homeowners may require loan servicers to document their right to foreclose. This legislation was signed by Gov. Brown in July 2012 and took effect on Jan. 1, 2013.
Most recently, Harris announced a settlement with J.P. Morgan Chase & Co. over its misrepresentation in residential mortgage-backed securities sold to California’s public employee and teacher pensions. The terms of the settlement resulted in California recovering nearly $300 million in damages.
In February 2013, Harris filed a lawsuit against Standard & Poors, one of the nation’s major credit rating companies, for inflating its ratings of structured finance investments, which caused California’s public pension funds and other investors to lose billions of dollars.
Created in May 2011 by Harris, the Mortgage Fraud Strike Force continues to lead the charge in investigating and prosecuting misconduct at all stages of the mortgage process.
For more information about the settlement, CA Ocwen borrowers can call 1-800-337-6695 and email [email protected]. The California Department of Justice also have more information at oag.ca.gov.