The nation’s fourth largest mortgage servicer has agreed to pay the state of Massachusetts a total of $3.7 million to resolve claims that it failed to provide certain notices to homeowners as required by state law and that it unlawfully foreclosed on certain properties, Attorney General Martha Coakley announced.
The assurance of discontinuance, filed in Suffolk Superior Court, alleges that the national loan servicer failed to follow Massachusetts law for notices and mortgage assignments in the handling of certain mortgage loans. This included failures to send state-mandated notices to homeowners in default, and failures to execute proper mortgage assignments, filed in the Massachusetts Registry of Deeds, as required by Massachusetts statutes. In addition, Litton Home Servicing Limited Partnership (Litton), a company acquired by Ocwen, allegedly initiated foreclosures when it did not hold the actual mortgages in violation of Massachusetts law.
“Massachusetts homeowners faced unnecessary challenges due to these companies failure to provide proper notices and by initiating illegal foreclosures,” AG Coakley said. “This agreement provides for direct relief for affected borrowers and requires that Ocwen undertake efforts to repair problem titles in the Commonwealth.”
The AG’s Office alleges that Litton’s unlawful conduct resulted in void foreclosures affecting the marketability and insurability of the titles. The Supreme Judicial Court ruled in the Ibanez decision that mortgagees must strictly comply with Massachusetts foreclosure laws. Under the statutory power of sale, a bank or other foreclosing party must be the mortgagee of record, or hold the mortgage through a valid assignment, prior to the publication of the notice of foreclosure sale, or the foreclosure will be void.
Under the terms of the settlement, $3 million will be paid to Massachusetts homeowners, and $700,000 will be paid to the Commonwealth.
Also as part of the agreement, Ocwen is required to properly execute documents filed in connection with foreclosure proceedings, and mail notices to residents that are in compliance with applicable statutes and regulations.
In December, Ocwen Financial Corporation of Atlanta, Georgia, its subsidiary, Ocwen Loan Servicing LLC, and two companies it purchased, Litton and Homeward Residential Holdings LLC, entered into a $2.1 billion national settlement resulting in an estimated $80 million in principal reduction and cash payments to Massachusetts homeowners. The national settlement resolved claims of loan servicing misconduct and so-called “robo-signing” claims. Massachusetts homeowners will also receive approximately $1.5 million in cash payments from that multistate agreement.
The National Mortgage Settlement, an agreement announced in February 2012, involving the nation’s five largest mortgage servicers and their connection with unlawful foreclosures and loan servicing has so far provided more than $63 billion in relief to distressed homeowners and created significant new servicing standards, which Ocwen must follow. The settlement brought more than $300 million in relief to Massachusetts borrowers, including a direct payment of more than $44.5 million to the Commonwealth, used in part to establish the AG’s HomeCorps program and offer grants aimed at helping to mitigate the impact of the foreclosure crisis.
This matter was handled by Assistant Attorneys General Amber Anderson Villa, Justin Lowe, and Stephanie Kahn of Attorney General Martha Coakley’s Consumer Protection Division, and Assistant Attorneys General Glenn Kaplan and Peter Leight of AG Coakley’s Insurance & Financial Services Division and paralegal Erica Harmon, also of the Insurance & Financial Services Division.