Written by The Business Journal Staff
(AP) — A mortgage services company signed a $225 million settlement with California regulators on Friday to settle allegations it overcharged active-duty military members, was late in providing key information for some civilian borrowers seeking to modify their loans and violated other laws.
Florida-based Ocwen Loan Servicing agreed to pay $20 million to reimburse borrowers and make $198 million in loan modifications over three years that will lower costs for thousands of California borrowers.
The settlement with the California Department of Business Oversight covers January 2012 through mid-2015, when Ocwen says it serviced more than 531,000 California loans. Under the terms, Ocwen may begin handling new California mortgages.
The settlement “will hold Ocwen accountable for widespread violations of laws that harmed borrowers in our state,” department Commissioner Jan Lynn Owen said in a statement.
Telephone and email messages left with Ocwen seeking comment were not immediately returned.
Wilbur Ross, President Donald Trump’s choice to head the U.S. Commerce Department, served on the board of Ocwen’s parent company, Ocwen Financial Corp., in 2013-14.
The billionaire investor sold subprime mortgage specialist Homeward Residential to Ocwen in 2012 amid investigations into his company’s business practices.
Ocwen previously settled a lawsuit with the U.S. Consumer Financial Protection Bureau and attorneys general in 49 states, including California, over alleged misconduct by Ocwen and by Homeward during the time it was under Ross’s control. The Senate is expected to vote on his nomination during the week of Feb. 27.
Ocwen previously paid about $2 million to more than 3,100 California borrowers because of what California regulators said was a practice of sending time-sensitive letters to borrowers after the date on the letter.
The tardy letters sometimes made it difficult for the borrowers to modify their loans, said regulators, who also found the company charged active-duty military personal more than the 6 percent rate mandated by federal law.
The settlement requires the company to contact more than 19,000 borrowers and compensate them if they were harmed.