Ocwen Financial To Pay $2.1B To Settle Accusations Of ‘Systemic Misconduct’

Posted by Patrick Barnard on December 19, 2013 No Comments
Categories : Mortgage Servicing

Mortgage servicer Ocwen Financial Corp. and its subsidiary, Ocwen Loan Servicing, have been ordered by state and federal regulators to provide $2 billion in principal reduction to underwater borrowers for the company's alleged ‘systemic misconduct at every stage of the mortgage servicing process.’

In addition, the company – the largest non-bank mortgage servicer and the fourth-largest servicer in the U.S. – has been ordered to refund $125 million to nearly 185,000 borrowers who have already been foreclosed upon and must adhere to significant new homeowner protections.

The punitive and compensatory action brought by the Consumer Financial Protection Bureau (CFPB), as well as authorities in 49 states and the District of Columbia, comes as a result of an investigation that began in early 2012.

At that time, examinations by the Multistate Mortgage Committee, which comprises state financial regulators, identified potential violations at Ocwen. As the investigation developed, and as federal authorities became involved, it was revealed that Ocwen had pushed some borrowers into foreclosure as a result of ‘servicing errors,’ including failing to apply payments made by borrowers in a timely manner and failing to maintain accurate account statements.

In addition, the servicer is accused of charging borrowers ‘unauthorized fees for default-related services,’ imposing force-placed insurance on consumers when they ‘already had adequate home insurance coverage,’ and providing ‘false or misleading information in response to consumer complaints,’ according to a CFPB press release.

Ocwen is also accused of deceiving consumers about foreclosure alternatives and improperly denying loan modifications. Specifically, the company ‘failed to effectively assist, and in fact impeded, struggling homeowners trying to save their homes’ by ‘failing to provide accurate information about loan modifications and other loss mitigation services; failing to properly process borrowers' applications and calculate their eligibility for loan modifications; providing false or misleading reasons for denying loan modifications; failing to honor previously agreed upon trial modifications with prior servicers; and deceptively seeking to collect payments under the mortgage's original unmodified terms after the consumer had already begun a loan modification with the prior servicer,’ the CFPB's release states.

In addition, Ocwen is accused of ‘providing false or misleading information to consumers about the status of foreclosure proceedings where the borrower was in good faith actively pursuing a loss mitigation alternative also offered by Ocwen’ and
‘robo-signing foreclosure documents, including preparing, executing, notarizing and filing affidavits in foreclosure proceedings with courts and government agencies without verifying the information.’

"Deceptions and shortcuts in mortgage servicing will not be tolerated," Richard Cordray, director of the CFPB, says. "Ocwen took advantage of borrowers at every stage of the process. Today's action sends a clear message that we will be vigilant about making sure that consumers are treated with the respect, dignity, and fairness they deserve."

To read the full complaint, click here.

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