The California Department of Business Oversight has announced that state residents who fell victim to alleged foreclosure abuses are due to receive $268 million in relief from a $2.1 billion national settlement with Ocwen Financial Corp.
According to the agency, Ocwen broke state law by improperly denying loan workouts, levying unauthorized fees, and failing to honor modifications granted by previous servicers. The March 17 announcement provided new details on how alleged victims would benefit from the deal -- which was finalized in February between Ocwen, the federal Consumer Financial Protection Bureau, and 49 states.
In addition, it has shone a spotlight on a growing controversy involving big-name lenders outsourcing their mortgage servicing operations to Ocwen and other companies that specialize in collecting payments, pressuring delinquent borrowers, and foreclosing on defaulted home loans. Critics are worried that these firms are taking on too many mortgage servicing rights (MSRs), and their inability to handle the volume is producing the same kind of problems that dogged the household names -- Bank of America and Chase, for example -- that sold them those MSRs.