December 19, 2013 - 11:26 AM
WASHINGTON - Ocwen Financial Corp. will reduce struggling borrowers' loan balances by $2 billion in an agreement with federal regulators and 49 states over foreclosure abuses.
The Consumer Financial Protection Bureau and state attorneys general announced the deal Thursday with the Atlanta-based company, one of the largest U.S. mortgage servicers. The regulators said Ocwen pushed borrowers into foreclosure through illegal actions, such as failing to promptly and accurately credit mortgage payments.
Under the agreement, Ocwen also will refund a combined $125 million to about 185,000 borrowers who have been foreclosed upon. It also agreed to change the way it manages mortgages. The company must stop "robo-signing" of documents, the practice of automatically signing off on foreclosures without a proper review.
The agreement must be approved by a federal court in Washington.
Federal and state regulators have signed agreements with a number of large banks and mortgage processing companies over foreclosure abuses.
Ocwen's compliance with the settlement will be overseen by Joseph A. Smith Jr., the monitor for the $25 billion settlement reached in February 2012 between the federal government and the states and five major banks — Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.
The housing crisis struck starting in 2007, as home values sank and millions of borrowers defaulted on their mortgages. The crisis brought more than 4 million foreclosures. Some mortgage-servicing companies had processed foreclosures without verifying documents.
News from © The Associated Press, 2013