Ocwen Financial Corporation (NYSE: OCN), which has been mired in regulatory controversy lately, reported today that its wholly-owned subsidiary Ocwen Loan Servicing reached a settlement with the state of California following allegations of noncompliance with state homeowner laws.
The $2.5 million settlement Ocwen Loan Servicing will pay to California’s Department of Business Oversight (CDBO) resolves claims that the company failed to provide documentation that determines its compliance with California’s Homeowners Bill of Rights.
Earlier this month the CDBO, which licenses nonbank mortgage lenders, accused Ocwen of defying its requests for information in efforts to determine the servicer’s compliance with these laws.
In a Form 8-K filed with the U.S. Securities and Exchange Commission Monday, Ocwen announced the terms of the settlement agreement, which includes the $2.5 million penalty plus the costs associated with the CDBO’s examination within 10 days.
Under the Consent Order, Ocwen Loan Servicing also agrees to cease acquiring any additional mortgage servicing rights for loans secured in California until the CDBO is satisfied that the company can “satisfactorily respond to the requests for information and documentation made in the course of a regulatory exam.”
In addition, the California regulator will select an independent third party auditor to assess Ocwen’s compliance with laws and regulations impacting California borrowers for an initial term of two years. This duration is extendable at the discretion of the CDBO.
As part of this examination, Ocwen will submit to the regulator a written plan to address and implement corrective measures and address any deficiencies identified by the auditor.
The agreement is the second in two months to be paid by Ocwen to state regulatory agencies.
Last month, the servicer, which is the parent company of Liberty Home Equity Solutions, paid a $150 million settlement to the New York Department of Financial Services to resolve allegations related to the company’s foreclosure practices.
Written by Jason Oliva