Two Billion Dollars In Relief Headed To Homeowners

In December 2013 the Federal Consumer Protection Bureau, District of Columbia, and 49 of 50 states reached an agreement with Ocwen Loan Servicing that requires Ocwen to provide $2.1 billion in relief to struggling homeowners. The agreement is still subject to approval by the courts.

Who is Ocwen Loan Servicing? Ocwen Loan Servicing is a loan servicer. Many people might say that their loan servicer is “the mortgage company” because they make their payments to the loan servicer and the loan servicer deals with all other issues of the loan (including defaults and foreclosures). However a loan servicer usually does not actually own the underlying loan – rather the owner of the loan (often Fannie Mae or Freddie Mac) has hired the loan servicer to “service” the loan.

What is unique about this deal is that it requires Ocwen to provide $2.1 billion of relief to homeowners. That $2.1 billion in relief isn’t money that comes out of the pockets of Ocwen, but comes from Ocwen’s clients – the owners of the mortgage loans. However, if Ocwen doesn’t get the $2.1 billion in relief out to homeowners within three years, Ocwen will need to pay a cash penalty for the amount of relief they didn’t get out to homeowners – from its own money!

Of this $2.1 billion, $2 billion must be provided in the form of principal reduction in the loans. This means that some portion of the amount owed must be forgiven. So what does this mean? It means that Ocwen finally has a compelling reason to work with homeowners to get their loans modified and provide relief to struggling homeowners.

Contact John Hargrave & Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

If You Owe Money on Your Home, Do You Really Own It?

If you are like most people, when you buy a home, you finance most of the purchase with money borrowed from a bank, mortgage company, or other lender. When you do, the lender secures their loan to you through a mortgage. Does this mean that the bank technically owns the house until you make the final payment? The answer is no.

When your bank loans money to you and secures the loan with a mortgage, the mortgage gives them the right to hold a lien on your property. You become the owner and, as the owner, you have all rights of use and enjoyment of your property. You may agree in the mortgage not to take actions that intentionally diminish the value of the property, or you may be prohibited by the terms of your mortgage from converting the property to rental property. As a general rule, though, your lender cannot tell you what you can do with your property.

The bank’s interest in the home only becomes relevant if you stop making payments on the home, if you file for bankruptcy, or if you decide to sell your property:

  • If you attempt to sell your home, the buyer cannot take clear title unless the lien that your bank holds is satisfied. To satisfy the lien, you must typically pay the full principal balance remaining on the loan.
  • If you file for bankruptcy, your lender must be listed as a creditor in the bankruptcy filing. A bankruptcy filing will allow you to ‘walk away’ from the home and forgive your personal debt to the lender. However, if you want to keep your home, you will need to continue to make payments to the lender. If you stop making payments on a mortgage, the bank cannot simply take possession of your home, as they could if they truly owned it. Instead, they must go through the foreclosure process, and must prove that their lien on your home is legitimate.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.