Ocwen Settles Whistleblower Lawsuits for $30M
Ocwen Financial Corp. has agreed to a $30 million settlement in two lawsuits alleging that the West Palm Beach, Fla.-based company violated the False Claims Act.
Under the settlement, Ocwen will pay $15 million to the federal government and $15 million to cover the attorneys' fees and costs incurred by the private citizens who brought forth the case, the company noted in a regulatory filing Wednesday. The settlement is subject to final approval by the government, and the trial set to begin June 27 for the case has been adjourned pending this approval.
Additionally, Ocwen will not admit any liability or wrongdoing as part of the settlement. U.S. Justice Department approval may take between 30 and 60 days, Compass Point Research and Trading analyst Fred Small wrote in an investors note released Thursday citing the proposed order.
"Ocwen agreed to the settlement, notwithstanding its belief that it has sound legal and factual defenses, in order to avoid the uncertain outcome of two trials and the additional expense and management time involved," the company said in its filing. "There can be no assurance that the settlement in principle will be finalized and approved by the United States and the Court. In the event the settlement in principle is not ultimately finalized and approved, the Fisher Cases would continue and we would vigorously defend the allegations made against Ocwen."
Ocwen also said that it planned the $30 million charge associated with the settlement because the company believes "this amount is both probable and reasonably estimable based on current information."
If approval is received, Ocwen will be able to put one of its most major legal hurdles behind it. The lawsuits, also referred to as the Fisher Cases, allege that the company provided false information in connection with its participation in the U.S. Treasury's HAMP and FHA insurance programs.
The plaintiffs sought damages that equated to three times the total HAMP incentive and FHA insurance payments Ocwen received for serviced loans and statutory penalties between $5,500 and $11,000 per false claim.
"While other legal and regulatory costs and challenges remain for Ocwen, and we don't expect profitability for several quarters, the FCA suits represented one of the largest potential monetary fines for the company," Small said in his note.
In May, the Justice Department sued Guild Mortgage over False Claims Act violations. And earlier this year, Wells Fargo agreed to a $1.2 billion settlement in its own fight with the FHA over alleged False Claims Act violations.