Ocwen Financial disclosed Thursday morning that it will pay $30 million to settle a pair of lawsuits that accused the nonbank of falsely certifying that it was in compliance with Federal Housing Administration and Home Affordable Modification Program rules.
Ocwen revealed the settlement in a filing with the Securities and Exchange Commission.
In the filing, Ocwen stated that it reached an agreement in principle to settle two related cases, U.S. Ex rel. Fisher v. Homeward Residential, Inc., et al and U.S. Ex rel. Fisher v. Ocwen Loan Servicing, LLC, et al, which are referred to as the Fisher Cases.
According to Ocwen’s filing, the Fisher Cases involved “allegations bought by private citizens on behalf of the United States that alleged in substance that Ocwen violated the False Claims Act by falsely certifying as to compliance with applicable laws and regulations in connection with Ocwen’s participation in the United States Treasury’s HAMP and FHA insurance programs.”
The lawsuits sought damages including an award equal to three times the total HAMP incentive and FHA insurance payments made by the United States on Ocwen-serviced loans and statutory penalties of between $5,500 and $11,000 per alleged false claim.
Ocwen’s SEC filing notes that the company was “vigorously defending itself” against these lawsuits and believes it has “sound legal and factual defenses” to the allegations.
Despite those beliefs, Ocwen chose to settle the lawsuits, agreeing to pay $15 million to the U.S. and another $15 million for the “private citizens’ attorneys’ fees costs.”
Ocwen stated that as part of the settlement, the company is not admitting to any liability or wrongdoing for the alleged actions.
“Ocwen agreed to the settlement, notwithstanding its belief that it has sound legal and factual defenses, in order to avoid the uncertain outcome of two trials and the additional expense and management time involved,” Ocwen said in its SEC filing
Ocwen said that it is setting aside $30 million for the settlement because it believes that amount is both “probable and reasonably estimable” based on current information, but cautions that 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, the Fisher Cases would continue and we would vigorously defend the allegations made against Ocwen,” the company added. “If our efforts to defend were not successful, our business, financial condition, liquidity and results of operations could be materially and adversely affected.”
According to Ocwen’s SEC filing, the sides advised the court on June 22 of the settlement agreements, and that the Department of Justice agreed to seek final approval for the settlement.
In a statement provided to HousingWire, Ocwen said that the company is “pleased” to reach a settlement in the Fisher 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 said in its statement. “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.”