Biden secures $7 million for Delaware borrowersOcwen Financial will provide direct financial benefits to borrowers
Delaware Attorney General Beau Biden hasannounced that Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, will provide $7 million to Delaware borrowers in the latest effort by his office to hold accountable those responsible for the mortgage foreclosure crisis. Today’s announcement with the nation’s fourth largest mortgage servicer is part of a national $2.1 billion national settlement with 49 states and the federal Consumer Financial Protection Bureau which holds Ocwen accountable for past mortgage servicing and foreclosure abuses, provides relief to homeowners, and stops future fraud and abuse.
“Our financial system only works when everyone follows the rules, and this settlement holds a financial institution accountable for breaking the rules and inflicting harm on homeowners and the economy,” Biden said. “The financial relief that my office has secured for Delawareans is a direct result of our ongoing investigations into the conduct that led to the economic crisis and our continued commitment to hold those responsible accountable for their actions.”
The settlement with Ocwen, which specialized in servicing high-risk mortgage loans, and two companies later acquired by Ocwen - Homeward Residential Inc. and Litton Home Servicing LP - was filed as a consent agreement in the U.S. District Court for the District of Columbia. It follows an ongoing joint state/federal investigation into mortgage servicing misconduct that began more than four years ago during the mortgage foreclosure crisis. According to the states and federal government in today’s court filing, 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.”
In Delaware, under the terms of the settlement $6.7 million will be provided to borrowers through mortgage principal reductions to current homeowners and approximately $350,000 will be paid to borrowers who lost their home to foreclosure between January 1, 2009, and December 31, 2013. Individual payments to foreclosed homeowners are projected to exceed $1,000. Nationally, Ocwen will provide $2 billion in mortgage principal reduction to current borrowers and $125 million for cash payments to borrowers on nearly 185,000 foreclosed loans.
Ocwen borrowers who seek a principal reduction through the settlement are urged to submit a completed loan modification application with Ocwen as soon as possible. Consumers can contact Ocwen at 1-800-337-6695 or ConsumerRelief@Ocwen.com. Borrowers having difficulty contacting Ocwen or who have questions should contact Biden’s office by calling the Delaware Homeowner Relief Hotline at 1-800-220-5424, and can also contact a Delaware HUD-approved housing counseling agency for assistance with the application process. Foreclosed borrowers who are eligible for the cash payment will be contacted directly by the settlement administrator. Joseph A. Smith, Jr., Monitor of the 2012 National Mortgage Settlement, will oversee the Ocwen agreement’s implementation and compliance.
This announcement is the latest in a series of enforcement actions Biden’s office has taken in response to the foreclosure crisis, including:
· In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with five national mortgage-servicing banks (including Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo), that has provided $75 million in direct financial benefit to more than 3,000 Delawareans and $11.7 million to the State. That settlement included important new financial protections Biden fought to secure for America’s military servicemembers.
· In July 2012, Biden secured important operational reforms from MERS – a national shadow mortgage registry at the heart of the mortgage crisis – in a settlement of a lawsuit he filed the year before. MERS’ inaccurate and unreliable records made it difficult if not impossible for homeowners to determine which financial institution owned their mortgage.
· In October 2012, Biden announced that an investigation by his office into allegations of “robo-signing” and other improper mortgage services provided by subsidiaries of Lender Processing Services, Inc., LPS, led to the Florida-based company paying $250,000 to the State of Delaware.
· In January 2013, Biden, 12 of his colleagues and the federal government filed separate suits against Standard & Poor’s, charging the rating agency with violating state law by misrepresenting that its evaluations of mortgage-backed securities were fair and impartial when actually S&P made decisions based on its own financial interests. That suit is still pending.
· In November, 2013 Biden secured $19.7 million for Delaware from JP Morgan Chase to resolve allegations concerning the company’s bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised and the resulting losses were catastrophic for the economy. Delaware’s payment, part of a national agreement with the federal government and four other states, will be used to compensate a variety of state entities for their losses on these investments and to fund further efforts to help Delawareans emerge from the financial crisis, strengthen Delaware’s communities and alleviate other harm caused by the financial crisis.
This settlement with Ocwen does not grant the company immunity from criminal offenses and it does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases. It also preserves the authority of state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.