Recently, this blog discussed a lawsuit that was filed by Illinois Attorney General Lisa Madigan against Safeguard Properties (“Safeguard”), a company that secures and maintains foreclosed homes for lenders and loan servicers, alleging that Safeguard wrongfully prevented residents from entering their homes by breaking in, changing locks, and shutting off utilities while foreclosure proceedings were still pending.
As part of that discussion, it was mentioned that last year, five banks and 49 state attorney generals entered into a $25 billion settlement requiring the banks to improve oversight of third-party service provides such as Safeguard. Now another massive settlement, this time related to the provision of mortgages, is making big news according to an article published by DSNews.com. According to the article, Ocwen Loan Servicing has agreed to provide $2 billion “in principal reductions to underwater borrowers, and refund $125 million to nearly 185,000 borrowers who were foreclosed on.”
The Consumer Financial Protection Bureau, along with 49 State Attorneys General, brought a lawsuit against Ocwen to force the company to remedy “systemic misconduct at every stage of the mortgage servicing process.” In addition to the substantial monetary settlement, Ocwen will also be required to “follow specific guidelines on mortgage services and face independent monitoring of that work.”
Beginning in July of 2011, the Federal Trade Commission opened an investigation into Ocwen’s business practices, followed shortly thereafter by the discovery of possible mortgage servicing violations by several state regulators. The Consumer Financial Protection Bureau and regulators then collaborated on a large-scale investigation culminating in the settlement and a report discussing how Ocwen’s “violations of consumer financial protections put thousands of people across the country at risk of losing their homes.”
Some of the many violations that Ocwen committed were to provide “false and misleading information about the status of a foreclosure at times when borrowers were actively seeking a loan modification” and to “robo-sign” foreclosures without personally attesting to the contents of certain legal documents to ensure accuracy and reliability. The company also failed to apply mortgage payments to customers’ accounts, assessed unauthorized fees, and impeded loss mitigation efforts.
As this blog has discussed before, since the start of the financial crisis in 2008, the number of foreclosures in Illinois has increased dramatically. According to realtytrac.com, in 2013, one in every five hundred twenty eight properties in Illinois is currently in foreclosure. Through the first half of 2013, Illinois posted the nation’s third highest foreclosure rate: 1.20% of housing units with a foreclosure filing. The increase in foreclosures has also made the improper business practices of companies such as Ocwen more and more common as regulators attempt to keep up with the detection and prosecution of such unscrupulous, and likely illegal, conduct.
A large number of homeowners face difficulties with mortgage servicers and real estate transactions in general. If you have questions regarding the rights and obligations you have as property owner or believe you have been the victim of the unfair practices of a lender, contact the experienced real estate attorneys at The Slater Firm, Ltd. today.