U.S. officials ordered the largest nonbank mortgage servicer to provide $2 billion in help to underwater borrowers to resolve allegations of misconduct that led to thousands of people losing their homes.
Ocwen Financial Corp must reduce loan balances for struggling homeowners and refund $125 million to foreclosed borrowers under an agreement with the U.S. Consumer Financial Protection Bureau and officials from 49 states and the District of Columbia.
Ocwen failed to account for borrowers’ payments, gave false reasons for denying loan modifications and robo-signed legal documents, the consumer bureau said.
In many cases, after Ocwen began servicing loans, it did not respect trial modifications that had already been agreed to by the lenders, consumer bureau Director Richard Cordray said.
“After examining the potential violations, we’ve concluded that Ocwen made troubled borrowers even more vulnerable to foreclosure,” Cordray said in a conference call with reporters.
Regulators found widespread abuses by servicers in the years after the 2007-2009 financial crisis, when foreclosures spiked. Several big banks, including Bank of America and Citigroup, settled with officials and agreed to tougher consumer protection requirements.
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