Ocwen Financial and Assurant have reached an agreement to settle charges that the embattled mortgage servicer profited from kickbacks on force-placed insurance policies with struggling homeowners.
The settlement, filed in federal court earlier this week, would provide $140 million in monetary relief to nearly 400,000 borrowers. It would also provide an additional $10 million for legal fees and expenses.
At issue in the class-action suit are insurance policies placed on foreclosed properties, to cover hazard, flood, flood-gap and wind insurance. Plaintiffs in the case accused Ocwen of inflating premiums and profiting from kickbacks through an arrangement with Assurant, the New York-based insurance provider that administered the policies.
“Ocwen decided to settle this matter to avoid prolonged and distracting litigation. The company does not admit any liability or wrongdoing with respect to this matter,” the company said in an emailed statement.
The settlement covers homeowners who were charged for policies between Jan. 1, 2008 and Jan. 23, 2015.
Under terms of the agreement, Ocwen would be prohibited from accepting commission for force-placed policies, or entering into “quota-share” arrangements with insurers. The settlement would also prohibit Assurant from accepting payments from Ocwen for below-cost or free outsourced services.
“We do not acknowledge any wrongdoing in this case, but feel it’s in the best interest of our company to attempt to resolve the matter,” Assurant said in an emailed statement.
The settlement is pending final approval in the U.S. District Court for the Southern District of Florida.
The class-action settlement is the latest in a string of legal and financial woes for the Atlanta-based Ocwen.
The company in December agreed to pay $150 million to settle allegations by New York regulators that it fudged foreclosure documents. As part of that agreement, the company’s founder and executive chairman, William Erbey, said he would step down after 30 years with the company.
Ocwen posted a $546 loss for the 2014 fiscal year, mainly because of increased legal charges.