Ocwen 8-K Says Company to Settle for $30 Million After Judge Rules Docs Admissible in HAMP False Claims Act Case
As reported here last week…
A Texas federal judge on Tuesday determined that banking documents related to a state government investigation into Ocwen Loan Servicing LLC’s financial practices, which the company claims to have “inadvertently disclosed” to relators bringing a pair of False Claims Act suits, are not privileged and can be used at trial.
Ocwen Loan Servicing, and subsidiaries Ocwen Financial Corp. and Homeward Residential Inc. are facing a pair of lawsuits brought by relators Michael J. Fisher and Brian Bullock alleging the companies provided false information to a federal loan program. U.S. District Judge Amos L. Mazzant on Tuesday rejected an argument from Ocwen that the reports produced by the West Virginia Division of Financial Institutions, according to West Virginia law, “shall be confidential,” because the documents discuss the financial condition of the loan servicing company.
The court found that the state’s laws actually explicitly say that in the context of a civil enforcement brought by a state or regulatory authority, that information can be disclosed. In this case, the relators “stand in the shoes of the state,” he wrote, which permits disclosure.
And now from Ocwen’s 8-K Report…
Item 8.01 Other Events.
Ocwen Financial Corporation and two of its subsidiaries (collectively, Ocwen) have reached an agreement in principle to settle the following previously disclosed litigation matters: U.S. Ex rel. Fisher v. Homeward Residential, Inc., et al and U.S. Ex rel. Fisher v. Ocwen Loan Servicing, LLC, et al (the Fisher Cases).
On June 22, 2016, the parties advised the Court of the settlement in principle. The Court has therefore adjourned the trials, pending approval of the final settlement.
As previously disclosed, 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 complaints in the Fisher Cases sought damages including (i) an award equal to three times the total HAMP incentive and FHA insurance payments made by the United States on Ocwen serviced loans and (ii) statutory penalties of between $5,500 and $11,000 per alleged false claim. Ocwen was vigorously defending itself against these allegations and believes it has sound legal and factual defenses to these allegations.
The United States Department of Justice has agreed to seek final approval of the settlement in principle. Subject to documentation of a definitive settlement and final approval by the United States, the settlement includes the following terms:
• No admission of liability or wrongdoing by Ocwen
• Payment of $15 million to the United States and $15 million for the private citizens’ attorneys’ fees and costs.
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. Accordingly, 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. 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. If our efforts to defend were not successful, our business, financial condition, liquidity and results of operations could be materially and adversely affected.
Another day, another dollar, but once again, no accountability…
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