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Ocwen Settles Allegations that Its Systems Led to Borrower Account Errors

  • Florida AG Ashley Moody reached a settlement with mortgage servicer Ocwen Financial Corporation and related companies (collectively “Ocwen”) to resolve allegations that the company mismanaged its recordkeeping relating to borrowers’ accounts in violation of the Florida Deceptive and Unfair Trade Practices Act, and the federal Real Estate Settlement Procedures Act and its implementing regulation, Regulation X.
  • The complaint alleged that Ocwen’s recordkeeping was deficient and resulted in significant errors, including illegal foreclosures, mishandled loan modifications, misapplied mortgage payments, missed insurance payments on borrowers’ behalf, overcharging borrowers’ accounts for default fees, and not handling borrowers’ complaints appropriately. The complaint further alleged that Ocwen willfully disregarded the advice of regulators and third-party auditing firms and did not update its technology to address these deficiencies.
  • Under the terms of the proposed consent judgment, among other things, Ocwen will pay $5.16 million to the state, including $2.15 million to be used for consumer relief, $2 million in civil penalties—of which $1 million will be suspended upon Ocwan’s compliance with the requirements of the consent judgment—and $2 million in attorneys’ fees. Ocwen will also automatically apply late fee waivers to eligible accounts at the cost of approximately $5.5 million and contact eligible borrowers with an offer of a loan modification program, which is likely to cost an additional $1 million. In addition, Ocwen will institute an enhanced process for the review and resolution of borrower complaints.
  • As previously reported, Ocwen reached a settlement with Massachusetts AG Maura Healey in 2019 to resolve allegations that it overcharged consumers in violation of state laws regulating mortgage servicing.