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.