Atlanta-based mortgage servicing firm Ocwen Financial disclosed that it has agreed to pay $30 million “in order to avoid the uncertain outcome of two trials” revolving around a pair of lawsuits that accused the company of falsely certifying its compliance with federal mortgage programs.
The cases, known as the Fisher Cases because of whistleblower Michael Fisher, revolve around accusations stemming from 2012 that Ocwen lied to the Federal Housing Administration about its compliance with Home Affordable Modification Program, or HAMP, rules, as well as FHA insurance programs.
According to Ocwen’s filing with the Securities and Exchange Commission on June 22, those suits sought damages intended to triple the total HAMP and FHA payments made on Ocwen-serviced loans, or roughly $5,500 to $11,000 per alleged false claim. Ocwen’s defense, according to the filing, was an assertion that it had “sound legal and factual defenses” to the allegations.
Ocwen, however, announced that it would instead settle by paying $15 million to the Unted States (which made the HAMP and FHA payments on the Ocwen-serviced loans) and another $15 million for “private citizens’ attorneys’ fees costs.” As part of the settlement, the company will not admit to any liability or wrongdoing for the alleged actions.
According to the SEC filing, the Department of Justice agreed to seek final approval for the settlement.
“We have accrued $30 million with respect to the settlement in principle because we believe this amount is both probable and reasonably estimable based on current information,” Ocwen wrote in its SEC filing, adding, “There can be no assurance that the settlement in principle will be finalized and approved by the United States and the Court.”
In the event the settlement in principle is not ultimately finalized and approved by the Department of Justice, the Fisher Cases would continue and “we would vigorously defend the allegations made against Ocwen,” the company wrote.
Ocwen spokesperson John Lovallo issued the following statement: “We are pleased to have reached an agreement in principle to resolve these two cases. Even though we have solid legal and factual defenses, we decided to settle to avoid prolonged and distracting litigation and the associated legal costs. Ocwen believes the proposed settlement is in the best interests of the company, its borrowers, employees and shareholders. We look forward to returning our full focus to what we do best—helping homeowners stay in their homes.”