Ocwen Financial Corp. will reduce struggling borrowers' loan balances by $2 billion in an agreement with federal regulators and 49 states over foreclosure abuses.
The Consumer Financial Protection Bureau and state attorneys general announced the deal Thursday with the Atlanta-based company, one of the largest U.S. mortgage servicers. The regulators said Ocwen pushed borrowers into foreclosure through illegal actions, such as failing to promptly and accurately credit mortgage payments.
Under the agreement, Ocwen also will refund a combined $125 million to about 185,000 borrowers who have been foreclosed upon. It also agreed to change the way it manages mortgages. The company must stop "robo-signing" of documents, the practice of automatically signing off on foreclosures without a proper review.
In Arkansas, homeowners with loans serviced by Ocwen are set to see principals reduced by a total of $5.56 million, Attorney General Dustin McDaniel said in a statement.
“Ocwen’s actions were similar to those that we have seen throughout the mortgage-servicing industry over the last several years,” McDaniel said. “This settlement holds the company accountable and ensures that Ocwen treats borrowers fairly in the future. Fortunately, Arkansas homeowners whose mortgages are serviced by Ocwen will receive some relief as a result of this agreement.”
The agreement must be approved by a federal court in Washington.
Information for this article was contributed by The Associated Press and by Katie Doherty of Arkansas Online.