On March 29, 2019, Attorney General Maura Healey announced a $2 million settlement of a lawsuit she initiated in 2017, again one of the nation’s largest mortgage servicer, Ocwen Loan Servicing LLC (“Ocwen”). In Massachusetts, Ocwen services tens of thousands of mortgages for Massachusetts homeowners.
Mortgage investors hire loan servicers like Ocwen to collect payments from borrowers, to maintain records of loan payments and balances, to follow up on delinquent accounts, to ensure that borrowers maintain property insurance, and to disburse property tax and insurance payments from borrowers’ escrow accounts.
Consumers charged for unnecessary forced-placed insurance and flood insurance
In filing her suit in 2017, Attorney General Healey said, “It is alarming that one of the nation’s largest mortgage loan servicers has proven itself to be incapable of properly handling homeowners’ mortgages in Massachusetts. Borrowers are entitled to fair, competent, and accurate handling of their mortgage and escrow accounts. We remain committed to helping homeowners avoid improper charges and abusive foreclosure practices.”
The Attorney General’s suit charged Ocwen with violating Massachusetts law by charging Massachusetts homeowners e excessive fees on any delinquencies with the insurance allegation being:
Improperly administering insurance premiums: Ocwen failed to disburse borrowers’ escrowed insurance premiums to insurers, causing their insurance policies to lapse, leaving them exposed to serious gaps in insurance coverage.
Unnecessary force-placed insurance policies: Ocwen, after improperly managing insurance payments for homeowners and lapsing coverage in some would then force-place very expensive, high deductible insurance property policies without liability or personal property coverage.
Unnecessary flood insurance: Ocwen force-placed borrowers into expensive flood insurance policies even though their properties were not in a special hazard flood area and did not require flood insurance.
Duplicative insurance policies: Ocwen also force-placed certain borrowers who already had insurance coverage, either through their own homeowners’ insurance or through other policies that Ocwen itself had acquired on behalf of the borrowers.
The settlement provides $2 million in restitution
On March 26, 2019, Judge Kenneth Salinger of the Business Litigation Session of Suffolk Superior Court entered a final judgment by consent settling the suit first filed by the Attorney General on April 28, 2017.
“This settlement will provide relief to thousands of Massachusetts homeowners harmed by abusive and unfair mortgage servicing practices.”
Under the terms of the consent judgment, Ocwen will pay $2 million in restitution to resolve allegations that it violated state law and committed unfair and deceptive practices by charging Massachusetts homeowners for unnecessary fees and overpriced force-placed insurance policies.
“Keeping families in their homes remains a top priority for my office,” said Attorney General Healey in announcing the settlement. “This settlement will provide relief to thousands of Massachusetts homeowners harmed by abusive and unfair mortgage servicing practices.”
Restitution payments could give some homeowners three-times their damages
Under the consent judgment, Ocwen’s $2 million in restitution will include direct cash refunds and account credits. Also, Ocwen will send notifications to 4,000 borrowers who may be eligible to receive a loan modification and has agreed, as part of the settlement, to halt foreclosure proceedings for certain homeowners to allow them time to apply for the loan modification.
Ocwen will also pay three times the damages for borrowers for whom the company wrongfully failed to disburse escrowed insurance premiums and reimburse borrowers who were unnecessarily charged for flood insurance policies.
Finally, Ocwen will implement new policies relating to the handling of customer complaints
One in a series of settlements by the Attorney General for forced-placed insurance abuses
The Attorney General’s Office obtained over $12 million in force-placed insurance related recoveries from HSBC, American Security Insurance Company (Assurant), and QBE Insurance over cases. Please refer to the following articles from Agency Checklists with regards to these settlements:
- HSBC to Refund Mass. Homeowners & Commonwealth $4 Million
- Restitution For Thousands Of Mass. Homeowners Overcharged For Force-Placed Insurance
- QBE To Refund $2.4 Million In Improper Charges To Massachusetts Homeowners
The Attorney General’s Office has also been a national leader in securing restitution and other relief for borrowers from banks and loan servicers obtaining settlements on behalf of Massachusetts homeowners from Morgan Stanley, Goldman Sachs, Royal Bank of Scotland, Citigroup, JPMorgan Chase, Countrywide, Fremont Investment & Loan, Option One, Ditech, HSBC, PHH, Nationstar, Shellpoint and others.
Attorney General Office personnel involved in the Ocwen Litigation
The Ocwen litigation and settlement was handled by Assistant Attorneys General Michael Lecaroz and Sarah Petrie, and Deputy Division Chief Shennan Kavanagh, all of the Attorney General’s Consumer Protection Division; and Assistant Attorney General Tim Hoitink and Deputy Director Arwen Thoman of the Attorney General’s Insurance and Financial Services Division.
About the Attorney General’s Divisions involved in the Ocwen suit and settlement
The Consumer Protection Division enforces laws to protect consumers from fraud, deception, and other unfair practices.
The Insurance and Financial Services Division investigates unfair or deceptive practices relating to investments and securities to protect consumers, municipalities, and the state in civil matters involving the insurance, securities, and lending industries. The division performs key consumer protection functions, including securities enforcement, insurance and lending enforcement, insurance rate cases and advocacy, and consumer mediation and advocacy.