Ocwen Under Regulatory Siege

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MORTGAGE EXPERT
4 · 20 · 17

Ocwen Financial Corp. Thursday was hit with multiple government lawsuits and regulatory orders issued by more than 20 states over its servicing practices and handling of escrow accounts.

The Consumer Financial Protection Bureau today filed a complaint in U.S. District Court for the Southern District of Florida against the West Palm Beach, Florida-based firm.

Also named as defendants in the federal lawsuit are subsidiaries Ocwen Mortgage Servicing Inc. and Ocwen Loan Servicing LLC.

According to the bureau, there have been years of widespread errors, shortcuts and runarounds at Ocwen that have cost some borrowers money and others their homes.

“Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance,” the CFPB said in a written statement. “Allegedly, Ocwen also illegally foreclosed on struggling borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records.”

The regulator also alleges that Ocwen
serviced loans using error-riddled information and bungled borrowers’ private mortgage insurance.

In addition, the complaint claims Ocwen
deceptively signed up and charged borrowers for add-on products, failed to assist heirs seeking foreclosure alternatives and failed to adequately investigate and respond to borrower complaints. Ocwen is further accused of failing to provide new servicers with complete and accurate loan information.

Ocwen issued a statement “strongly” disputing the CFPB’s claim that its servicing practices have caused substantial harm to consumers.

“In fact, just the opposite is true,” the statement said. “Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers. The substantive allegations in today’s suit are inaccurate and unfounded.”

Ocwen said it is unaware of the CFPB
conducting any detailed review of its servicing files.

Rather, the CFPB suit is primarily based on the CFPB’s flawed review of data and its self-serving conclusion about isolated instances where Ocwen self-identified ways we can do better,” the statement said.

According to the statement, Ocwen is responsible for 20 percent of all modifications done through the Home Affordable Modification Program. In addition, it claims to have
provided billions of dollars in principal forgiveness to borrowers at risk of foreclosure.

“A homeowner whose loan is serviced by Ocwen has a much better chance of avoiding foreclosure than if their loan is serviced by any other large mortgage servicer,” the news release stated.

Ocwen said it will
defend itself against the unfounded claims.

Also filing a lawsuit against the mortgage servicer and two subsidiaries was Florida
Attorney General Pam Bondi and Florida Office of Financial Regulation Commissioner Drew J. Breakspear.

The state alleges
that Ocwen filed illegal foreclosures, mishandled loan modifications, misapplied mortgage payments, failed to pay insurance premiums from escrow and collected excessive fees.

The complaint alleges violations of the Real Estate Settlement Procedures Act, the Florida Deceptive and Unfair Trade Practices Act and Chapter 494, Florida Statutes. 

Bondi noted that Ocwen services more than 125,000 Florida loans.

An announcement from North Carolina Commissioner of Banks Ray Grace indicated that the state issued a cease-and-desist order against the three Ocwen entities.

The action was taken “to address mishandling of consumer escrow accounts and a deficient financial condition.”

The order
specifically prohibits the acquisition of new mortgage servicing rights and the origination of mortgage loans by Ocwen Loan Servicing until it can prove it can appropriately manage its consumer mortgage escrow accounts.

The North Carolina announcement additionally indicated that state mortgage regulators representing more than 20 states have concurrently issued regulatory enforcement orders against Ocwen subsidiaries.

We have just received various orders from state mortgage regulators, and are in the process of reviewing them in detail,” Ocwen explained. “We will respond promptly to all of the matters raised after a full review. We believe we are properly licensed in all of the states where we conduct business.

Shares of Ocwen, which closed yesterday at $5.40, were trading at $2.67 this afternoon.

Mortgage Expert

Mortgage Daily Staff

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