(Reuters) - Ocwen Financial Corp OCN.N said on Friday its loan servicing unit agreed to pay $25 million and provide another $198 million in debt forgiveness under a settlement with a California regulator over allegations that Ocwen violated federal and state laws related to borrowers' rights.
Ocwen said it did not admit any wrongdoing under the settlement with the state’s Department of Business Oversight. The company, which previously reserved for the $25 million settlement amount, said the debt forgiveness will be provided via loan modifications to existing California borrowers over a three-year period.
The state regulator will terminate the consent order that has been in place since January 2015 and terminate the engagement of the independent auditor in place under that order, Ocwen said.
The Department of Business Oversight has also lifted its restriction on Ocwen’s ability to acquire mortgage servicing rights on properties in California.
“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,” Ocwen’s chief executive, Ron Faris, said in a statement.
"The terms will hold Ocwen accountable for widespread violations of laws that harmed borrowers in our state," state Commissioner Jan Lynn Owen said in a separate statement. (bit.ly/2lt6Gtf)
According to the Department of Business Oversight, Ocwen engaged in practices that in some cases jeopardized borrowers’ ability to obtain loan modifications, provided inaccurate information on notices of default, failed to reduce interest rates in a timely manner for California active-duty personnel, and failed to submit correct information to credit-reporting agencies on borrowers after having previously providing erroneous information.
The Department of Business Oversight said Ocwen must make the $25 million cash payment, which includes $20 million in borrower restitution and $5 million in penalties and fees, before it can acquire new servicing rights.
Reporting by Laharee Chatterjee in Bengaluru; Editing by Leslie Adler
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