One of the nation’s largest processors of consumer mortgage payments—Ocwen Financial Corp.—was sued by the Consumer Financial Protection Bureau and also faces a cease and desist order by a multistate committee that's essentially shutting down the lender’s operations in a handful of states.
Ocwen, based in West Palm Beach, Fla., services loans for borrowers in every U.S. state and the District of Columbia. As of Dec. 31, 2016, it serviced nearly 1.4 million loans worth an aggregate unpaid principal balance of $209 billion.
The CFPB filed a lawsuit this week against OFC and its subsidiaries, accusing the firm of “failing borrowers at every stage of the mortgage servicing process.” The CFPB alleges “widespread errors, shortcuts, and runarounds cost some borrowers money and others their homes.”
The CFPB’s charges against OFC are extensive, alleging the firm wrongfully initiated foreclosure proceedings on at least 1,000 people, failed to appropriately credit payments made by several borrowers, and loaded inaccurate and incomplete information into its servicing system, among other accusations.
“Today’s suit can only be viewed as a politically motivated attempt by the CFPB to grab headlines in reaction to the change of administration and recent scrutiny of the CFPB’s activities," OFC responded in a statement to the lawsuit.
OFC has also been facing troubles from a cease and desist order that was issued recently by a Multi-State Mortgage Committee, consisting of a group of state regulators that have been conducting an investigation into OFC’s operations. The order requires OFC to immediately stop acquiring new mortgage servicing rights or acquiring or originating new mortgages until it meets requirements for information from state regulators on an investigation into its financial matters. The OFC has 20 days to request a hearing on the matter.
In 2015, Florida, Maryland, Massachusetts, Mississippi, Montana, and Washington conducted a multistate examination of the company’s operations stemming from Jan. 1, 2013, to Feb. 28, 2015. Through that investigation, state mortgage regulators alleged several alleged violations of state and federal laws, such as consumer escrow accounts that were not reconciled, accusing OFC of failing to make disbursements from the accounts on several loans and routinely sending customers inaccurate or misleading escrow statements. Also, the regulators allege that ongoing unlicensed activity was found in some states. North Carolina commissioner Ray Grace issued a cease and desist order against OFC, under the authority of the Multi-State Mortgage Committee.
“Ocwen has consistently failed to correct deficient business practices that cause harm to borrowers,” said Ray Grace, North Carolina’s Commissioner of Banks, in a press release this week. “We cannot allow this to continue.”
The cease and desist order states the company failed to respond to a request for additional information regarding the allegations. In December 2016, OFC and state regulators entered into an agreement for an independent auditing firm to conduct a further examination of the allegations and submit a report on its findings by Jan. 13, 2017. The Committee says, however, that OFC failed to provide enough information to address its financial condition by the deadline.
Source: “Ocwen Sued, Shut Down in Multiple States,” Mortgage News Daily (April 20, 2017) and “Subprime Mortgage Giant Ocwen Rocked by U.S. Suit Claiming Abuse,” Bloomberg (April 20, 2017)
