Federal and state authorities have ordered Ocwen Financial Corp. to provide $2 billion in principal reductions to underwater borrowers and to refund $125 million to nearly 185,000 foreclosed borrowers to settle allegations that the mortgage servicer violated consumer protection laws and put thousands at risk of foreclosure.
Ocwen is the fourth-largest mortgage servicer in the country and specializes in servicing subprime or delinquent loans.
The Consumer Financial Protection Bureau (CFPB) and authorities in 49 states and the District of Columbia accused Ocwen of “systemic misconduct at every stage of the mortgage servicing process.” This included failing to apply payments made by borrowers on time and failing to maintain accurate account statements; charging borrowers unauthorized fees for default-related services; imposing force-placed insurance on consumers when Ocwen knew or should have known that they already had adequate home insurance coverage; and providing false or misleading information in response to consumer complaints, the CFPB said.
Ocwen also deceived consumers about foreclosure alternatives, improperly denied loan modifications, and robo-signed foreclosure documents, the federal agency added.
In addition to providing principal reductions and refunds, Ocwen will be required to adhere to new homeowner protections.