The California Department of Business Oversight [1], along with 48 other states, reached a settlement with Ocwen [2]Financial Corporation and Ocwen Loan Servicing, according to a press release issued by the department.
The $2.1 billion settlement was in response to violations regarding mortgage servicing laws.
"The agreement calls for $2 billion in loan modification relief in the form of principal reductions for homeowners in default or at risk of foreclosure. The settlement also provides for $127.3 million in cash payments to borrowers whose home was sold in a foreclosure proceeding from January 1, 2009, to December 31, 2012," the department said in a release.
California's share of the settlement is estimated at $268 million.
The lawsuit stems from Ocwen's acquisition of two mortgage servicers, Litton Loan Servicing, LP and Homeward Residential, Inc., in 2011 and 2012, respectively. Ocwen was liable for prior malfeasance.
"As described in the allegations below, the Servicers' misconduct resulted in premature and unauthorized foreclosures, violation of homeowners' rights and protections, and the use of false and deceptive affidavits and other documents," the settlement said.
The complaint was filed against Ocwen in Federal Court by 49 state attorneys and the Consumer Financial Bureau. 100 percent of the settlement proceeds are earmarked to directly benefit consumers—no payments will go to the federal government or any states.
"Californians should not lose their homes because of deceptive and poorly executed mortgage servicing practices," said Jan Lynn Owen, the state of California's Commissioner of Business Oversight. "The Department of Business Oversight strives to identify and hold accountable mortgage companies that violate state and federal laws. This settlement provides needed relief to affected California homeowners."
Ocwen could not be reached for comment.