Federal, State Agencies Accuse Ocwen Of Mortgage Errors, Illegal Foreclosures

  • Federal, State Agencies Accuse Ocwen Of Mortgage Errors, Illegal Foreclosures

Federal, State Agencies Accuse Ocwen Of Mortgage Errors, Illegal Foreclosures

According to the order issued by the North Carolina Commissioner of Banks, the West Palm Beach, Fla. -based Ocwen entered a memorandum of understanding with the states last December, which required the servicer to perform a complete reconciliation of its escrow accounts.

"Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes", CFPB Director Richard Cordray said. The CFPB said it had uncovered "substantial evidence" that Ocwen has engaged in significant and systemic misconduct "at almost every stage of the mortgage servicing process".

The investigation focuses on whether the Company and its executives violated federal securities laws by engaging in activities that resulted in lawsuit being filed by the U.S. Consumer Financial Protection Bureau ("CFPB").

The bureau said some of Ocwen's alleged violations included illegally foreclosing on homeowners, failing to credit borrowers' payments, botching escrow accounts, servicing loans using error-riddled information, and deceptively signing up and charging borrowers for add-on products. "However, Ocwen has consistently failed to correct deficient business practices that cause harm to borrowers", Ray Grace, North Carolina's Commissioner of Banks, said in a press release on Thursday.

Ocwen, one of the largest mortgage servicers, services roughly 1.4 million loans with a total principal balance of $209 billion.

The CFPB claims it has "uncovered substantial evidence that Ocwen has engaged in significant and systemic misconduct at almost every stage of the mortgage servicing process".

A company that services escrow accounts is required to make timely insurance and/or tax payment's on behalf of the borrowers. "The agency said that Ocwen's head of servicing called the system "ridiculous" and a 'train wreck" in 2014.

The CFPB and Florida's actions came within an hour after 20 states, led by North Carolina, filed cease-and-desist orders against the firm and its units, accusing them of mishandling consumer escrow accounts.

Ocwen, in a statement, said it "strongly disputes" the CFPB's accusations.

Following the legal actions against the company, Piper Jaffray recommended traders short shares of REIT New Residential Investment Corp (NYSE: NRZ), which owns some of Ocwen's servicing rights.

Ocwen did not immediately respond.

Regulators said when consumers complained to Ocwen, the company routinely failed to acknowledge or investigate the grievances.

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