Ocwen Financial Corp. agreed to pay $3.7 million to settle a Massachusetts lawsuit related to mortgage handling. Homeowners will receive $3 million while the remainder will go to state coffers.
The lawsuit alleged that Ocwen, the nation's fourth largest mortgage collector, or servicer, unlawfully foreclosed on properties and did not provide the required notices to homeowners who were at default. Further, Litton Home Servicing LP, an acquired company of Ocwen, breached state laws by allegedly initiating foreclosures when it did not hold the actual mortgages, Attorney General Martha Coakley announced Monday.
The settlement follows the massive $2.1 billion settlement with the Consumer Financial Protection Bureau and other regulators announced last December. The settlement resolved charges of improper handling of mortgages.
Regulators in that case, which included authorities in 49 states and the District of Columbia, accused Ocwen of pushing borrowers into foreclosure through servicing misconduct, deceiving consumers about foreclosure alternatives, improperly denying loan modifications and engaging in illegal foreclosure practices.
A statement from Ocwen said "the agreement...is in alignment with the same ultimate goals that we share with the regulators - to prevent foreclosures and help struggling families keep their homes."
According to Coakley's office, in the Massachusetts lawsuit, "Litton's unlawful conduct resulted in void foreclosures affecting the marketability and insurability of the titles. The Supreme Judicial Court ruled ... that mortgagees must strictly comply with Massachusetts foreclosure laws. Under the statutory power of sale, a bank or other foreclosing party must be the mortgagee of record, or hold the mortgage through a valid assignment, prior to the publication of the notice of foreclosure sale, or the foreclosure will be void."
As part of the agreement, Ocwen must properly execute documents filed in connection with foreclosure proceedings, and mail notices to residents that are in compliance with applicable statutes and regulations.
Zacks Equity Research published a report on the settlement, stating: "Though we are encouraged by Ocwens efforts to gradually resolve its legal hassles, the company is still facing challenges in carrying out its operations. Notably, in February 2014, Benjamin Lawsky, superintendent of New York's Department of Financial Services, restricted the proceedings of the cash-deal worth $2.7 billion entered into by Wells Fargo & Company and Ocwen in January 2014 as it doubted Ocwens capability to service loans."