LITTLE ROCK – Arkansans will receive more than $5 million as part of a national settlement with Ocwen Financial Corp. over allegations of misconduct related to the company’s mortgage foreclosure practices, Attorney General Dustin McDaniel said Thursday.
Arkansas joined the $2 billion national settlement with 48 other states and the federal government.
Ocwen is the nation’s fourth-largest mortgage servicer and specializes in servicing high-risk loans, the attorney general’s office said. The company is accused of engaging in misconduct that resulted in premature and unauthorized foreclosures, violations of homeowners’ rights and protections and the use of false and deceptive documents and affidavits, including “robo-signing.”
Arkansas homeowners with loans serviced by Ocwen are expected to receive approximately $5.56 million in principal reductions, according to the release.
“Ocwen’s actions were similar to those that we have seen throughout the mortgage-servicing industry over the last several years,” McDaniel said in a release. “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 settlement does not affect criminal prosecutions and it does not prevent any homeowners or investors from pursuing individual, institutional or class action civil cases, McDaniel’s office said. The agreement also preserves the authority of state attorneys general and federal agencies to continue to investigate and pursue other aspects of the mortgage crisis.
A settlement administrator will contact qualified borrowers regarding payments related to foreclosures.
Also Thursday, McDaniel said he has joined 41 other attorneys general in asking Congress to extend tax relief for distressed homeowners.
A provision enacted in 2007 that expires on Dec. 31 permits mortgage debt forgiven after a foreclosure, short sale or through a loan modification provided to a homeowner in financial hardship to be excluded from a taxpayer’s calculation of taxable income.
McDaniel and his counterparts said in a letter to congressional leaders that extending the benefit “is crucial to both the homeowners struggling to regain their financial footing and to the battered housing market whose recovery is slow and still uncertain.”