A new report suggests that the Consumer Financial Protection Bureau has been treating Ocwen Financial Corp. too harshly.
Last month, the CFPB announced a federal lawsuit filed against the West Palm Beach, Florida-based mortgage banking firm.
alleged years of widespread errors, shortcuts and runarounds at Ocwen that have cost some borrowers money and others their homes.
But the CFPB’s actions against Ocwen
have been too severe, according to a draft working paper by Christopher Whalen of Whalen Global Advisors LLC.
Whalen, who previously worked as
a senior managing director & head of research at Kroll Bond Rating Agency Inc., said that Ocwen is being held to a far higher standard than any other mortgage servicer given the amount of fines and penalties imposed on Ocwen and the “impressive record that the company has amassed in terms of helping consumers via loan modifications and permanent principal forgiveness.”
Whalen said that Ocwen completed 53 percent more modifications through the Home Affordable Modification Program than Wells Fargo & Co. In addition, Ocwen has completed three times more permanent principal reduction loan modifications than any other servicer.
The paper said that of the record $3 billion in fines levied by the CFPB in 2014, $2 billion came from Ocwen.
Whalen noted that Ocwen has been the
target of a concerted campaign by the CFPB as well as state agencies and private investor groups.
He said that the bureau’s structure might be a factor in the unfair treatment.
“The CFPB may be compromised by partisan political concerns due to the construction of the Dodd-Frank Wall Street Reform legislation, leaving the agency vulnerable to political manipulation and abuse of its extensive regulatory power,”
Another factor is private investors’ attempts to force Ocwen to sell its servicing to parties that will accelerate
foreclosures on troubled borrowers.
Whalen additionally noted that short sellers might have had advance notice of the CFPB’s lawsuit last month.
“The campaign against [Ocwen] seems to represent an opportunistic attack led by the CFPB, which views the company as an easy target politically and as a practical matter,” Whalen said. “Larger banks and non-bank firms are far more difficult targets, even for an agency as powerful as the CFPB.
“But it needs to be said that many of the errors alleged against [Ocwen] are also present in the servicing operations of other large banks and nonbank mortgage firms.”