Embattled mortgage servicing giant Ocwen has agreed to pay $225 million in refunds and loan forgiveness to California homeowners. The payment is part of a settlement over allegations that Ocwen violated state and federal mortgage rules over the last several years, according to a Los Angeles Times report.
The California Department of Business Oversight said that an independent audit of Ocwen’s business practices uncovered hundreds of violations, including failure to send required notices to borrowers, sending other notices late and failing to comply with a federal regulation requiring lenders to lower interest rates for active-duty military personnel, the Times reported.
Between 2012 and 2015, when the alleged violations took place, Ocwen serviced more than 500,000 mortgages in California. The Department of Business Oversight didn’t specify how many borrowers were harmed by the company’s alleged violations.
Under the settlement, Ocwen will pay the state of California $5 million in penalties and fees, as well as $22 million in restitution to borrowers. It will also provide $198 million in loan forgiveness to borrowers over the next three years, the Times reported.
That amount could grow, however. Ocwen has been settling with homeowners over instances when the company mailed time-sensitive letters to customers after the date on the letters. According to the Times, sometimes the delays endangered the homeowners’ ability to get loan modifications.
Ocwen said it had already paid about $2 million to more than 3,000 California borrowers harmed by the issue. Under its settlement with the state, the company must reconsider claims from another 19,295 borrowers and pay them restitution if they’re eligible for it, according to the Times.
Ocwen did not admit wrongdoing in the settlement.
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