Ocwen settles final state action over its servicing practices
Ocwen Financial has wrapped up the series of 30 cases filed by state regulators and/or attorneys general over its mortgage servicing escrow practices, entering into a settlement with officials in Florida.
"Ocwen believes that it has sound legal and factual defenses to all of the State of Florida's claims, but concluded that it is in the best interest of its stakeholders to resolve this matter without admitting liability in order to avoid the further distraction and expense of litigation," a statement from the West Palm Beach, Fla.-based company said.
A press release from the Florida Attorney General's office, which was working in tandem with the state's Office of Financial Regulation pegged the settlement at over $11 million, while Ocwen said it was paying almost $5.2 million. It is also liable for an additional $1 million in two years if certain loan modification-related obligations are not met.
The disparity between those two amounts is attributed to the company waiving approximately $5.5 million in late fees that have been assessed but not yet collected, an Ocwen spokesperson said.
"This represents an additional direct monetary benefit to thousands of Florida borrowers. We do not expect the waiving of late fees will have a material adverse effect on our financial results or our ability to achieve our financial objectives," the spokesperson said.
Florida, in conjunction with the Consumer Financial Protection Bureau, was the first state to act against Ocwen in April 2017. Separately at the same time, a group of 20 states — which later grew to 30 states — filed their own lawsuit over the same allegations regarding the company's escrow practices.
As part of those initial regulatory settlements, Ocwen had to move its servicing portfolio to Black Knight's platform from the Altisource Portfolio Services technology it had been using. Ocwen and Altisource were once corporate siblings under the management ofWilliam Erbey.
The transition was one of the reasons behind Ocwen's February 2018 agreement to purchase PHH Mortgage, since PHH's systems allowed the company to migrate over to Black Knight's platform more easily.
The Florida settlement came a year after Ocwen won a partial dismissal of Florida's case by Federal District Court Judge Kenneth Marra. In September 2019, the same judge dismissed the CFPB's Ocwen case in its entirety, but did so without prejudice, giving the agency the opportunity to refile. The CFPB case is active again, and the Bureau and Ocwen are scheduled to enter into mediation on Oct. 23.
Many of those other state settlements did not require Ocwen to pay financial penalties. But the Massachusetts Attorney General's office, which pursued its own action separate from the state's mortgage regulator, required Ocwen to pay $2 million to settle its allegations over the servicing practices in April 2019.