Thousands of Georgia borrowers who lost their homes to foreclosure or were victims of possible improper lending practices will have loans reduced or possibly receive cash payments in a $2.1 billion settlement the state and others announced this week with Atlanta-based Ocwen Financial Corp., a major mortgage servicer.
The state Attorney General’s Office announced Friday that Georgia’s share of the settlement is at least an estimated $35.7 million. He said that amount will be used to reduce first lien principals for about 7,602 borrowers.
In addition, some Georgia homeowners whose loans have already been foreclosed may receive cash payments that exceed $1,000. The number of valid claims submitted will determine how many borrowers are eligible for payments.
The settlement “is in alignment with the same ultimate goals that we share with the regulators — to prevent foreclosures and help struggling families keep their homes,” Ocwen said in a statement.
The company did not admit to any wrongdoing.
State Attorney General Sam Olens said the settlement “provides relief to homeowners and prevents future fraud and abuse.”
Georgia routinely was a leader in foreclosures during the housing crises from 2008 through 2012. Foreclosures in the state reached 117,107 in 2009 and 127,140 in 2010 before falling to 109,538 in 2011, according to Equity Depot data.
Lenders and their loan servicing operations were accused of misconduct in determining whether foreclosures were warranted for thousands of high-risk “subprime” borrowers who were having trouble keeping up with payments. Among other things, they were accused of misleading customers about the foreclosure process and alternatives to avoid losing their homes, and charging unauthorized fees.
Ocwen specializes in serving high-risk mortgage customers. The settlement announced this week involves the company and two companies it later acquired, Homeward Residential Inc. and Litton Home Servicing LP.
Earlier this year, more than 50,000 Georgia borrowers who lost their homes to foreclosure received about $1,480 as part of the National Mortgage Settlement, a $25 billion agreement involving the country’s five largest mortgage servicers: Ally (formerly GMAC), Bank of America, Citi, JPMorgan Chase and Wells Fargo. Ocwen now services the bulk of the mortgages once held by Ally Financial.
As part of its settlement with Georgia and 49 other states, Ocwen will commit $2 billion to first-lien principal reductions, pay $125 million to borrowers associated with 183,984 foreclosed loans, and pay $2.3 million in settlement administration costs.
The state AG’s office said it might take three years to carry out the settlement and that the company will contact some borrowers directly regarding principal reductions.
The office also advises borrowers to contact Ocwen directly to determine how they may be affected by calling toll-free at 1-800-337-6695 or sending an email to ConsumerRelief@Ocwen.com.
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