Regulators sue Ocwen Financial, say it mishandled mortgages

Paterniano Del Favero
Aprile 21, 2017

Ocwen submitted a plan to a group of more than 20 state regulators in January to fix the escrow accounts, and said that reconciling the accounts would cost $1.5 billion, and would be "well beyond Ocwen's financial capacity to fund", according to a North Carolina cease-and-desist order.

A separate lawsuit came today from the Florida attorney general and other state regulators are hitting Ocwen with cease-and-desist and license revocation orders, the CFPB said, allegedly for escrow management and what the agency called "licensing issues".

Other times, Ocwen "failed to appropriately credit payments made by numerous borrowers", the agency claims.

"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.

Shares of Ocwen Financial (OCN) imploded on Thursday, losing half its volume after US and state regulators said they had sued the mortgage-servicing giant on the grounds that it illegally foreclosed on borrowers, cut corners and failed to carry out basic duties. The federal consumer watchdog alleged Ocwen also ignored customer complaints and failed to make disclosures about errors in borrowers' records when selling off the servicing rights to their loans to other companies.

A spokesman for Ocwen said a statement was forthcoming. North Carolina's bank regulator said fixing some of the company's problems could put it out of business.

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

In perhaps the most damning passage, the Commissioner of Banks claims that if the servicer were to include these liabilities, "it would indicate that Ocwen continuing as a going concern would be in doubt". As of December 31, Ocwen serviced almost 1.4 million loans with an aggregate unpaid principal balance of $209 billion, the CFPB said.

"Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment", the statement continued.

If you are an Ocwen shareholder and are interested in learning more about the investigation or your legal rights and remedies, please contact Jim Baker ([email protected]) at 619-814-4471.

The lawsuits call for Ocwen to pay penalties as well as undisclosed financial relief to borrowers. The CFPB went after Ocwen in 2013, again alleging that the company had failed to services its loans improperly.

In one case, a borrower with a mortgage modification started having her payments rejected. If you email, please include your phone number.

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