Published: Fri, April 21, 2017
Business | By Sandy Mccarthy

Regulators sue Ocwen Financial, say it mishandled mortgages

Regulators sue Ocwen Financial, say it mishandled mortgages

Ocwen conducts mortgage loan servicing for approximately 1.5 million consumers nationwide, including about 13,500 in Wisconsin.

— Neglected to properly investigate and respond to complaints about errors.

The CFPB said Ocwen violated the Consumer Protection Act, which protects consumers from unfair, deceptive, or abusive acts or practices, and failed to comply with mortgage servicing rules that went into effect in 2014.

When data was accurate, REALServicing still generated errors because of system failures and deficient some instances, Ocwen tried manual workarounds, but they often failed to correct inaccuracies and produced still more errors.

Ocwen said it received the orders from state regulators and "are in the process of reviewing them in detail".

The company would then use this faulty information to service borrowers' loans.

Numerous errors, the CFPB says, came about through Ocwen's flawed proprietary servicing system known as REALServicing, which the company's servicing head once referred to as a "train wreck".

In all, Ocwen improperly started foreclosure proceedings on at least 1,000 people, the CFPB charged.

Mortgage escrow accounts are utilized to pay taxes and insurance and hold borrower funds the company is entrusted to manage appropriately.

According to the order, the examination also found that Ocwen "routinely sent consumers inaccurate, confusing, and/or misleading escrow statements".

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Ocwen said it "strongly disputes" the CFPB's claims and vowed to "vigorously defend itself", adding that "the substantive allegations in today's suit are inaccurate and unfounded". This has been confirmed by independent third-party studies, which find that Ocwen has a superior record helping borrowers bring their payments current, stay current, and repay their mortgage.

— Failed to make timely home insurance payments that led to lapses in coverage for more than 10,000 borrowers.

California was not a part of Thursday's enforcement actions, but the state had suspended Ocwen's right to service new mortgages in California in January 2015. Consumers don't get to pick their mortgage servicing companies, leaving homeowners at the mercy of whether the company is competent.

Altisource had been part of Ocwen's internal technology company until it was spun off in 2009. State Street Corp now owns 1,836,727 shares of the financial services provider's stock worth $9,901,000 after buying an additional 91,782 shares during the period.

"Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers".

The claims filed by the CFPB, however, completely ignore all of this.

In a similar, but separate action today, Florida Attorney General Pam Bondi filed a lawsuit against Ocwen for mortgage servicing misconduct.

Auditors also said the firm failed to inform borrowers of the timelines to accept or reject loan modification offers and sometimes failed to notify borrowers that were more than 45 days late on mortgage payments, according to the state.

"Ocwen has a history of issues involving improper servicing and handling of escrow accounts", said department Director Patrick McPharlin.

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