Regulators sue Ocwen Financial, say it mishandled mortgages

The U.S. Consumer Financial Protection Bureau, described its lawsuit, stating Ocwen and its subsidiaries failed borrowers at "every stage of the mortgage servicing process" and committed "years of widespread errors, shortcuts, and runarounds". According to Bondi's office, Ocwen filed illegal foreclosures, mishandled loan modifications, misapplied mortgage payments, failed to pay insurance premiums from escrow and collected excessive fees. The frustrating and expensive experience of one consumer cited in the CFPB lawsuit illustrated the problems some borrowers confronted when dealing with Ocwen. The action sent Ocwen's shares plunging about 50 percent.

On a Thursday call with reporters, CFPB Director Richard Cordray accused Ocwen of "years of systemic and significant errors throughout the mortgage servicing process". Those are just a few of the violations the CFPB alleged in its complaint.

The news sent shares of Ocwen falling by more than 50 percent in afternoon trading.

At year-end 2016, Ocwen serviced almost 1.4 million loans with a total unpaid balance of $209 billion, according to CFPB.

Violations included "letter dating", or sending time-sensitive letters after the date on the letter; giving the borrower less time to act; providing inaccurate information on notices of default; wrongfully informing borrowers they were current on their payments; and overcharging active-duty military personnel on mortgage interest rates.

As Bloomberg reports, the U.S. Consumer Financial Protection Bureau is accusing Ocwen of errors in some of the most basic and fundamental operations of collecting mortgage payments. Mortgage lenders can assign the servicing rights on their loans to any company they choose.

According to the order, on February 28, 2015, the states of Florida, Maryland, Massachusetts, Mississippi, Montana, and Washington conducted a Multi-State Examination of Ocwen in order to determine Ocwen's compliance with applicable federal and state laws and regulations, financial condition, and control and supervision of the licensed mortgage servicing operations.

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".

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The company said the allegations are "inaccurate and unfounded".

Renaissance Technologies LLC reduced its stake in Ocwen Financial Corp (NYSE:OCN) by 3.4% during the fourth quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission.

News of the CFPB accusations plus related legal actions against Ocwen filed by at least 20 states sent shares of Ocwen crashing by almost 60 percent in just over an hour, starting after a cease and desist order filed by North Carolina.

Rosen Law Firm, a global investor rights law firm, announces it is investigating potential securities claims on behalf of shareholders of Ocwen Financial Corporation (OCN) resulting from allegations that Ocwen may have issued materially misleading business information to the investing public.

"Ocwen strongly disputes the CFPB's claim that Ocwen's mortgage loan servicing practices have caused substantial consumer harm", the statement said. "Enough is enough. Florida's distressed Ocwen borrowers should no longer have to endure costly servicing errors and unfair practices".

Ocwen has been in regulatory trouble before.

Wilbur Ross, who is now Commerce Secretary, served on the board of Ocwen Financial Corp.in 2013-14.

(Copyright © 2015. All Rights Reserved.)
 
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