Regulators sue Ocwen Financial, say it mishandled mortgages

  • Regulators sue Ocwen Financial, say it mishandled mortgages

Regulators sue Ocwen Financial, say it mishandled mortgages

Ocwen employees had to manually enter basic information on a borrower, which in turn led to more errors, the CFPB said.

"The consumer bureau has uncovered substantial evidence that Ocwen engaged in unfair and deceptive practices", CFPB Director Richard Cordray said, adding that thousands of customers were harmed.

The actions by the federal and state governments are the latest black eye for Ocwen, which grew to become one of the nation's largest nonbank mortgage servicing firms after the housing crash but has been swamped by regulatory problems and consumer complaints.

Ocwen Financial and its subsidiaries faced a slew of accusations from federal and state regulators on Thursday, as the Consumer Financial Protection Bureau and Florida accused it of widespread servicing errors, while 20 states filed separate cease-and-desist orders against the firm for improper handling of consumer escrow accounts.

"Ocwen has consistently failed to correct deficient business practices that cause harm to borrowers", said Ray Grace, the commissioner of banks for North Carolina.

At the end of a year ago, Ocwen serviced almost 1.4 million loans with an unpaid principal balance of $209 billion, according to the consumer bureau. It said the company would go after borrowers long before verifying whether the debt was valid, allegedly foreclosed illegally on at least 1,000 homeowners, and charged borrowers for add-on products without their consent.

In a statement, West Palm Beach, Florida-based Ocwen vowed to defend itself against the CFPB's "unfounded claims", saying it had cooperated fully with the bureau's inquiries and that the regulator was overreaching.

"If I could change systems tomorrow I would", the Ocwen executive said.

A company that services escrow accounts is required to make timely insurance and/or tax payment's on behalf of the borrowers.

The CFPB, the state of Florida, and other state agencies are suing Ocwen or issuing cease-and-desist orders against the company in the joint action filed Thursday.

According to the North Carolina order, Ocwen told a multi-state investigatory committee that reconciling all its escrow accounts would cost $1.5 billion "and be well beyond Ocwen's financial capacity to fund".

Florida Attorney General Pam Bond and Florida's Commissioner of Financial Regulations filed its lawsuit against Ocwen and two mortgage servicing subsidiaries Ocwen Loan Servicing and Ocwen Mortgage Servicing for filing illegal foreclosures and other issues.

Through its complaint, the CFPB seeks a court order requiring Ocwen to follow mortgage servicing law, provide unspecified relief for consumers, and pay penalties.