Who has ever heard of a mortgage servicer refunding money back to their borrowers? This may not be a first, but it certainly is a rare occasion.
One of the largest U.S. lenders of home mortgage loans voluntarily refunded $674,137 to over 180 Maryland homeowners. After state scrutiny found violations of imposing prepayment penalties, contrary to Maryland law, Ocwen Loan Servicing (OLS) volunteered to fork up the refunds.
Financial Regulation Commissioner Sarah Bloom Raskin made the announcement earlier this year stating that Ocwen was cooperative in the examination. Executive Vice President (EVP) Paul Koches said that Ocwen also conducted its own investigation of the company’s entire Maryland loan portfolio. Koches is EVP for Ocwen Financial Corporation in West Palm Beach, Florida, the parent company of OLS.
Koches stated that the company services loans that are initiated by other companies, and the loans that were in violation were not initiated by Ocwen. Along with servicing the loans from other lenders, OLS collects mortgage payments and forwards them to lenders. OLS also ensures that each borrower has a homeowners insurance policy.
Refund payments were delivered via U.S. Postal Service.
Prepayment penalty clauses state that if borrowers pay off their mortgages early, they are required to pay a monetary penalty to their loan servicer. Bloom Raskin’s opinion is that prepayment penalties, all too often, trap borrowers in a vicious cycle of debt. She commented in a press release that the state was pleased to be able to assist Maryland homeowners in benefiting from the laws designed to protect them and that they appreciated Ocwen’s cooperation in the matter.
In a monumental decision, Ocwen Financial signed an agreement with Governor Martin O’Malley whereby the company committed to assist in reducing the number of foreclosures in Maryland. Ocwen was recognized by the state for its leadership efforts to help homeowners avoid foreclosure.
Nationwide, Ocwen services around 341,000 mortgages and 7,072 mortgages in Maryland at the time of this state examination.
