Ocwen to Shell Out $56 Million in Class-Action Settlement

Ocwen Financial Corporation (NYSE: OCN) on Thursday announced that has reached a $56 million settlement over a federal class-action lawsuit, the latest in a line of issues for the troubled servicer.

The lawsuit stemmed from alleged problems with restatements in Ocwen’s 2013 and 2014 financial statements, as well as a 2014 consent decree from the New York State Department of Financial Services that prohibited the company from gaining additional mortgage servicing rights in the state.

The West Palm Beach, Fla.-based Ocwen originates and services reverse mortgages under its Liberty Home Equity Solutions subsidiary.

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“While the company believes that it has sound legal and factual defenses, Ocwen agreed to this settlement in order to avoid the uncertain outcome of the trial and the additional expense and demands on the time of its senior management,” the company wrote in an 8-K filing.

The settlement includes $49 million in cash for the plaintiffs, along with an additional 2.5 million shares of Ocwen stock that the company pegged at about $7 million; under the terms of the agreement, the servicer can also elect to simply pay the additional amount in cash.

After insurance covers a portion of the outlay, Ocwen will end up taking a financial hit of $34 million to $36 million, which the company intends to record in the second quarter of 2017. Ocwen warned that that the decision isn’t final and remains subject to a judge’s approval.

“In the event the settlement in principle is not ultimately finalized and approved, the litigation would continue and we would vigorously defend the allegations made against Ocwen,” the company wrote.

Back in March, Ocwen made a major move to extract itself from the terms of the 2014 New York order, reaching a deal with the Empire State to remove a mandatory third-party monitor and create a potential pathway to begin acquiring servicing rights once more. The state had forced Ocwen to pay $150 million in fines stemming from record-keeping failures and improperly handled foreclosures as part of the consent order.

But Thursday’s settlement announcement still marks the most recent step in Ocwen’s regulatory woes, which remain ongoing on several fronts: The servicer must currently contend with a lawsuit from the Consumer Financial Protection Bureau and cease-and-desist orders from up to 30 states that bar Ocwen from gaining new mortgage servicing rights. Those orders generally did not affect Liberty’s operations, as RMD reported at the time.

Ocwen had attempted to shed the CFPB lawsuit by requesting an immediate ruling on the bureau’s constitutional authority, but in June a judge rejected that argument. Based on these challenges, Moody’s downgraded company’s outlook and projected more woes to come.

“The negative outlook reflects the expectation that Ocwen will continue to experience elevated legal and regulatory costs that negatively impact its profitability,” Moody’s wrote in its release announcing the downgrades.

Written by Alex Spanko

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  • “And the hits just keep on comin'”

    How can Liberty not be hurt by this publicity? I would not be surprising to see the Liberty management try to break away from Ocwen.

    • Liberty management can’t just break away from the parent company Ocwen. The management if interested would have to have the financing in place and make an offer. I don’t see this happening.
      If Ocwen really needed the cash Liberty would be put up for sale.

      • treverse,

        No one is saying any effort has been or is being made. Who cares about Ocwen, the statement was about the future efforts of the management of Liberty. The management at Ocwen is not the management at Liberty nor is the management at Liberty the management at Ocwen.

        Your response looks as if my comment was about the management at Ocwen when it was about the future efforts of the management at Liberty in TRYING to find a way to pull away from Ocwen.

    • I do too and have dealt with their shady practices for years. How can customers benefit from this ? Ocwen has caused me nothing but heart ache and headaches and sleepless nights. I’ve been with them 15 years and my mortgage has only decreased 3K . It makes no sense to me and I can’t get a straight answer. Plus they keep raising my mortgage payment when I have a traditional not ARM mortgage. I’m open to any news anyone may have.

      • You can’t refinance? We had the same problem with them. They kept saying we owed more when we paid on time and kept saying we were late when we weren’t also kept sending someone to check on the house that we had to pay for. Also a couple of weeks after we signed our refinance they said we still owed 1800. We had to pay it too. I want my money back

      • We have been fighting ocwen for years went to a lawyer he recommended filing bankruptcy and soon as we complete move the mortgage we were sceptical but in January completed bankruptcy and had no problem moving the mortgage and during bankruptcy they can’t mess with or add any of there fictitious fees life is better . And a judge will go through your mortgage agreement and fix it we were paying 1400$ a month during proceedings we found out our mortgage was 645$ the rest were there fake fees and the over payments went towards Principle as of today we will pay off in 4 yrs . And we built in 2005 . Life is pretty now

      • Do what I did file bankruptcy the courts are very aware of Owen practices the go through the mortgage fix it and credit your overpayments to principle anancan’tdd ocwen can’t mess with you while your in bankruptcy life is good

      • Do you think we will benefit a bit from that class law suit, I think we should because they know how to purge their customers for themortgage rates, fees and other stuff that they charged for . Sad. I am calling them to find out

      • Our mortgage was sold to ocwen a number of years ago, it was so bad we were going to let them foreclose, then we modified our mortgage. What they are doing is a reverse mortgage where they are applying only interest to the loan, so you only have a few and I mean a FEW $$ going towards the loan. From the time we modified the loan amount 5 yrs ago loan increased by 6,000 NOT DECREASED. You really only have 2 choices-Forclosure (or short sell) and Re-financing. We had to wait until our credit improved enough to re-fi with a legitimate U.S. Company. I had to take out tens of thousand of dollars in my IRA just to be able to compensate for to 20% equity needed in the loan. OCWEN is NOT a Mortgage Company. It is not US based, it is an offshore company.
        They did horrible things to us, LOST Payments. Couldn’t read our Checks (same ones we have used for 30+ yrs, same bank) Found our checks in drawers. Credited payments after grace period so payments would be late.UNTIL I wrote them for several months in a legal letter if they lost one more payment I was SUEING them. Suddenly no more late issues.
        I truly believe senators or congressmen have ownership in this company, because OCWEN does not have to follow US banking rules, their parent company is overseas. The US offices only process payments, but the money goes directly to an offshore account because we were able to get a copy of one of our “lost” checks, with all their banking information on the back.

      • I am in the same situation. I not only lost the 120,000 down payment, I am underwater. Now this native american ploy. Could this be legit. Can they hire a native american individual and claim then claim protections, very little, offered to those of us who are native american?

      • Same thing happened here we went to a lawyer filedd bankruptcy the judge fixed everrything file bankrupctcy and you will be fine .. bankruptcy courts are very aware of Owen

      • Why have you just rolled over go file bankruptcy it isn’t what you think the courts are aware of Owen & they can fix it I filled the judge fixed my mortgage I have got 1 phone call 1 letter . The whole mortgage was fixed I got alot of credit towards my principle we built in 2005 this past January when completed with about 4 yrs left on my mortgage & I had no trouble moving the loan

  • Ocwen is my service provider and I have written letters, turned in reports to CFBP for at least 3 yrs now! This company sold my house at Sheriff’s auction and had me served a 5 day eviction notice and charged me fee’s WHILE I HAD BEEN ALREADY PAYING 4 MONTHS ON AN APPROVED MODIFICATION through them!! They forgot to cancel the foreclosure and have yet to credit me the fee’s for eviction, sale and so on although those things should have never taken place.. it has been hell dealing with them for several years, they don’t post payments they get and can be verified they were paid, they returned payments made through bill pay claiming it wasn’t cashiers check then charge late fees and return payment fees, they have unexplained adjustments to escrow adding a shortage balance with no explanation, they have charged for forced coverage when I have always had coverage with a major insurance company that i even carry escrow for!! If I had money for an attorney I would soooo be in court and I am sure I am not the only person that this has been happening to and Ocwen doesn’t give a damn about little old me knowing i myself wont and cant hurt their company so they do what ever they want to do.. in fact they changed the terms of my loan recently without my authorization or sign. is that even legal? I wish they would start a class action lawsuit about these items I bet it would change their ways then. Not to mention my loan has increase 34,000. in the time I got sold to Ocwen!! This place is unreal and they charged me an 8.50 inspection fee every single month and certified mail fee that i never get every month also…! i wish I had an attorney!

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