Ocwen is the latest mortgage servicer to enter into a consent order with the CFPB and 49 of the 50 states. Ocwen is being held accountable for its illegal mortgage servicing practices which include: "unfair shortcuts, unauthorized fees, deception, illegal foreclosures, and other illegal practices." According to the CFPB, Ocwen will provide $2 billion in loan modification relief to its customers. It will also pay out $125 million in refunds to homeowners who lost their homes.
To be eligible for relief under the consent order, consumers must have been serviced by Ocwen, Litton Loan Servicing, or American Home Servicing, Inc. (AMHSI), also known as Homeward Residential Holdings LLC. The servicing must have taken place between January 1, 2009 and December 31, 2012. Foreclosure victims will receive a notice and a claim form from the settlement administrator.
Consumers can also contact Ocwen directly by calling (800) 337-6695 or emailing ConsumerRelief@Ocwen.com.
I have not yet had time to review a copy of the consent order. As we saw with the National Mortgage Settlement, banks were given the ability to satisfy most of their financial obligations by forgiving second mortgages. These loans were generally uncollectable and some had been discharged in bankruptcy. Many were written off by the bank.
Allowing the banks to count the "forgiveness" of these loans towards their required restitution under the settlement undercut the impact of the settlement. It turned a punitive measure into a payday for the banks that provided little benefit to the consumers that the settlement was intended to help.
Given that this settlement appears to require loan modification assistance, I am hopeful that it will not be a wholesale giveaway to Ocwen.