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Ocwen Financial settles with the Massachusetts Attorney General-Maura Healy

Posted by Matthew T. Desrochers | Apr 06, 2019 | 0 Comments

Massachusetts Attorney General settles with Ocwen Financial

Pursuant to a settlement with Ocwen Financial, Ocwen will provide $2 million in penalties and restitution to mortgage borrowers in the Commonwealth of Massachusetts as part of the settlement with the state over alleged “widespread” mortgage servicing problems.

A lawsuit was filed in May of 2017 Ocwen Financial will provide $2 million in restitution to mortgage borrowers in the state of Massachusetts as part of the settlement with the state over alleged “widespread” mortgage servicing problems.

30 other states have also filed suit over alleged escrow and other servicing issues.

As part of that action, Massachusetts' Office of Consumer Affairs & Business Regulation Division of Banks prohibited Ocwen from acquiring new MSRs, prohibited it from originating new loans, prohibited it from servicing any mortgages in the state, and ordered Ocwen to transfer all mortgages it services to other servicers.

Beyond that, Massachusetts Attorney General Maura Healey sued the company, alleging that Ocwen charged homeowners in the state for “unnecessary and expensive force-placed insurance policies, imposed excessive fees on delinquent borrowers, and failed to properly process escrow and insurance payments.”

Just over a year ago, Ocwen settled with the Massachusetts banking regulator, but Healey's lawsuit remained.

Now, Ocwen and Massachusetts are settling the state's lawsuit as well.

According to the Mass. A. G.'s office, the settlement resolves allegations that Ocwen “violated state law and committed unfair and deceptive practices by charging Massachusetts homeowners for unnecessary fees and overpriced force-placed insurance policies.”

Specifically, Healey accused Ocwen of a number of violations, including

Unnecessary flood insurance:  Ocwen forced placed Flood insurance on property that did not require such;

  • Improperly administering insurance premiums: Ocwen escrowed borrowers insurance payments and then failed to disburse such when due.
  • Bogus Inspection Fees: Ocwen took advantage of struggling borrowers by charging duplicative and unnecessary pre-foreclosure property inspection and preservation fees for grass cuts, landscaping, and title review. In some cases, Ocwen conducted three property inspections in the same month and ordered several grass cuts within the same week, then passed the costs on to the borrower.
  • Failing to respond to borrower disputes and requests for information: Ocwen failed to provide timely and adequate responses to borrowers' requests for information, complaints, and notices of error, causing problems to go unaddressed.

Under the terms of the settlement, Ocwen does not admit liability, but the company will pay $2 million in restitution, including direct cash refunds and account credits to affected borrowers.

Additionally, Ocwen will send notifications to 4,000 borrowers who may be eligible to receive a loan modification. The company also agreed to halt foreclosure proceedings for certain homeowners so they can apply for said loan modification.

“Ocwen will also pay three times the damages for borrowers for whom the company wrongfully failed to disburse escrowed insurance premiums and reimburse borrowers who were unnecessarily charged for flood insurance policies,” Healey's office stated.

Also, Healey's office said that Ocwen must implement new policies relating to the handling of customer complaints.

“Keeping families in their homes remains a top priority for my office,” Healey said in a statement. “This settlement will provide relief to thousands of Massachusetts homeowners harmed by abusive and unfair mortgage servicing practices.”

In a statement, Ocwen said that it believes it has “sound legal and factual defenses” to the allegations levied by Healey, but chose to settle the lawsuit and move on.

“We have agreed to resolve this matter, which covers certain legacy servicing activities, without admitting liability,” Ocwen said in a statement.

While Ocwen believes that it has sound legal and factual defenses, we concluded that settling this matter in order to avoid the distraction and expense of litigation is in the best interest of Ocwen and its constituents, and resolves another legacy matter,” the company continued. “We are committed to serving our customers in a fair and appropriate manner, and we look forward to continuing to work proactively with our regulators and making a difference in the lives of the customers we serve.”

According to Ocwen, the settlement will see them make a payment to Massachusetts of $675,000, enact a loan modification program for certain eligible Massachusetts borrowers, along with “certain already-completed relief.”

 

About the Author

Matthew T. Desrochers

Mr. Desrochers is the managing attorney at the office that was founded in 1999.  Matthew helps homeowners avoid foreclosure and get out of debt.  This work consist of Loan Modification, Short Sales, Chapter 13 and Chapter 7 bankrcupty cases, including mortgage settlement and IRS Offers in Comprom...

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