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CFPB Suit against Ocwen alleges lack of Foreclosure Protection…

And total Failure of Mortgage Servicing Process

In a 93 page complaint recently filed in Southern District of Florida, the Consumer Financial Protection Bureau alleged that Ocwen Financial Corporation, Ocwen Mortgage Servicing, Inc. and Ocwen Loan Servicing, LLC, collectively “Ocwen” “…improperly calculated loan balances, misapplied borrower payments, failed to correctly process escrow and insurance payments and failed to property investigate and make corrections in response to consumer complaints.” And that “Ocwen compounded these failures by illegally foreclosing upon borrowers’ loans and selling loan servicing rights to [other] servicers without fully disclosing or correcting errors in borrowers’ loan files.” Click here to see the entire filed complaint.

Meanwhile 20 states led by North Carolina filed cease and desist orders against the firm for improper handling of escrow accounts. The cumulative result of the complaints, despite the $12.5 million set aside for settlement, tumbled Ocwen Stock values by 55%, raising questions about whether one of the largest servicers in the United States can survive. According to a release by the CFPB, Ocwen serviced almost 1.4 million loans with an aggregate unpaid principal balance of $209 billion, as of the end of 2016. Whether the mistakes are due to inadequate software or poor training, Ocwen is accused of wrongfully initiating foreclosure proceedings on at least 1,000 people, and has improperly sold properties in wrongful foreclosure actions.

John Lovallo, an Ocwen Spokesman fired back: “Ocwen strongly disputes the CFPB’s claim that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm. In fact, just the opposite is true,” “… 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.”

This is not the first case against Ocwen for violations of servicing regulations, but Ocwen had been preparing to shed the servicing restrictions placed by New York Department of Financial Services. In fact, an agreement had been newly signed that would have allowed Ocwen to acquire more servicing rights again, but in light of the new suits pending, the agreement will not be executed at this time.

Ocwen has committed to remediate any harm experienced by the small number of customers, but the CFPB is not satisfied, and is pushing for change.

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