December 19, 2013
Attorney General Kane announces $2 billion foreclosure settlement; calls on Congress to help homeowners
HARRISBURG - Attorney General Kathleen G. Kane today announced her involvement in a federal and multistate investigation and $2 billion national settlement with Ocwen Financial Corporation and Ocwen Loan Servicing. The settlement is the result of a mortgage foreclosure practices investigation of the firms and two companies that they acquired. Pennsylvania consumers may receive over $52 million in relief through principal reductions as a result of the settlement.
Based on the joint investigations of the Consumer Financial Protection Bureau (CFPB) and the states, Ocwen was found to have engaged in practices that harmed consumers in violation of the federal Consumer Financial Protection Act and state laws. They caused injury to consumers who have had home loans serviced by Ocwen and business that they acquired. Consumers paid improper fees and charges, incurred unreasonable delays and expenses to obtain loss mitigation relief, and faced improper denial of loss mitigation relief.
?Firms like these were not only responsible for the financial crisis but also for causing emotional and financial turmoil for many individuals and families,? Attorney General Kane said. ?These firms are now being held accountable for their actions and Pennsylvania consumers are finally getting some of the relief they rightfully deserve.?
The settlement, filed today with the SEC, includes $2 billion committed by Ocwen for principal reductions for its borrowers. Borrowers must meet certain criteria to be eligible. After Ocwen analyzed its data on existing delinquencies, it projected that 2.613% of the relief, or $52,251,106, would go directly to Pennsylvania consumers. This number is truly an estimate and the exact amount of relief will not be known until Ocwen has satisfied its obligations.
Pennsylvania consumers can find out whether their mortgage is serviced by Ocwen by calling Ocwen directly at 1-800-337-6695 or emailing their question to ConsumerRelief@Ocwen.com. Consumers can also contact the Pennsylvania Office of Attorney General?s Bureau of Consumer Protection at 1-800-441-2555.
The national settlement, filed today along with the complaint in the U.S. District Court for the District of Columbia, addresses servicing misconduct by Ocwen, and two companies later acquired by Ocwen, Homeward Residential Inc. and Litton Home Servicing Limited Partnership (Litton). The CFPB has also published an extensive FAQ explainer for homeowners.
Calling on Congress to Maintain Aid for Struggling Homeowners
Attorney General Kane also called on Congress today to extend tax relief for struggling homeowners. In a letter to Congressional leaders signed with 41 other state attorneys general, Attorney General Kane urged Congressional leaders to avoid a setback for financially strapped homeowners and disruption to a slowly improving housing market.
Under the federal Mortgage Debt Relief Act of 2007, mortgage debt that is forgiven after a foreclosure or short sale or through a loan modification provided to a homeowner in financial hardship may be excluded from a taxpayer?s calculation of taxable income. This exclusion only applies to mortgage debt forgiven on primary residences, not second homes.
?I urge Congress to again extend this critical tax exclusion so that families who have been able to receive mortgage debt relief do not then face a tax bill that they cannot afford,? Attorney General Kane said. ?I believe this tax relief is critical not only for struggling families but also for the continuing recovery of our housing market.?
An extension for 2014 is included in the Mortgage Forgiveness Tax Relief Act (S. 1187 and H.R. 2788), both of which are in committee; it is uncertain when these critical bills may be considered. The current Ryan-Murray budget proposal does not include the exemption provision.
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