Mortgage servicer Ocwen Financial will pay a fine of $25 million and will deliver about $198 million in debt forgiveness through loan modifications to California borrowers over a three-year period as a result of a settlement the company has reached with the California Department of Business Oversight (DBO).
As per the settlement, which was announced on Friday, restrictions that prevented Ocwen from acquiring mortgage servicing rights in California will be lifted.
The settlement is the result of allegations brought in 2015 by the DBO alleging that Ocwen had failed to turn over documentation showing that it complies with the state’s laws. There were no allegations that the documentation itself was false or misleading – just that it had not been provided. Under an initial settlement, Ocwen paid a $2.5 million fine and a monitor was placed in the company’s operations, at its own expense. The monitor’s activities reportedly uncovered additional onboarding activities that were in violation of the initial settlement terms – and that ended up costing the company nearly $150 million in third-party monitoring costs from Jan. 1, 2014, through June 30, 2016, Ocwen claimed in an SEC filing. The company tried to buy its way out of that settlement, but its bid to do so was rejected, leading to the much larger settlement announced this past Friday.
“Ocwen is pleased to have reached a comprehensive settlement with the DBO related to matters the agency raised, and we will quickly move forward to implement all terms associated with this agreement,” says Ron Faris, president and CEO of Ocwen, in a statement. “The settlement resolves claims between Ocwen and the DBO without the company admitting to any wrongdoing and will allow us to focus on our business going forward, while reducing a significant expense by terminating the engagement of the independent auditor.”