Ocwen Financial Corporation has come under fire from federal and state agencies for disreputable mortgage collection practices, resulting in widespread errors and illegal foreclosures. The problem is widespread enough that the early analysis completed by North Carolina’s bank regulator suggests that fixing the errors could end up putting Ocwen out of business, even as it faces a separate battle against the Consumer Financial Protection Bureau in a lawsuit filed by the agency. The CFPB lawsuit is just the tip of an iceberg that promises more lawsuits to come, as each state and federal agencies all seek reparations for the widespread errors.
Ocwen Faces a Foreclosure of Its Own at the Hands of the C.F.P.B.
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. Among the allegations, the C.F.P.B. is accusing Ocwen of sending inaccurate monthly statements, failing to accurately credit payments, and gross errors in the handling of taxes and insurance coverages of escrow accounts.
The Consumer Financial Protection Bureau isn’t the only government institution seeking damages against Ocwen. The Florida attorney general has filed a similar suit against the corporation.
“As regulators, we encourage and advise companies to remain compliant with state and federal laws. However, Ocwen has consistently failed to correct deficient business practices that cause harm to borrowers,” Ray Grace, North Carolina’s Commissioner of Banks, said. “We cannot allow this to continue.
In releasing a statement, Ocwen has denied any wrongdoing, either through errors or deliberate manipulation, in response to the C.F.P.B. lawsuit. The corporation’s statement says that the allegations made by the Consumer Financial Protection Bureau are “inaccurate and unfounded,” adding that the government agency is “overreaching” in its assessment of Ocwen’s business practices. Further, Ocwen disputes charges that they have done serious harm to consumers via their mortgage loan practices, indicating that any foreclosures have been justified and legal.
Ocwen Faces an Avalanche of Lawsuits
In addition to a bevy of lawsuits filed by the federal government, The New York Times reports that Ocwen is facing lawsuits from several states in the union with the possibility of more states jumping on the bandwagon. Before Ocwen faces a foreclosure of its own, the mortgage lending company may end up taking hits from every state in the country.
Of the multiple lawsuits, Ocwen has been charged with “flagrant and repeated abuses” in dealing with its customers, counting illegal foreclosures, hidden or misrepresented fees, and the mismanagement of home loan payments among the corporations most egregious practices.
At this time, up to 20 state regulators have filed charges against Ocwen, seeking to either limit or freeze the corporation’s ability to obtain new mortgage loans.
Ocwen has 1.4 million borrower accounts, resulting in $200 billion in mortgage debt. Of that number, 580,000 consumers have complained to Ocwen about mortgage payment errors over the last two years. Even counting that list of reportable errors, Ocwen maintains its innocence in regards to the allegations made by the Consumer Financial Protection Bureau and other state and federal agencies.
“In fact, just the opposite is true. Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers.”
This isn’t the first time Ocwen has gone up against the C.F.P.B. In 2013, the mortgage lender faced similar charges, again brought to light through a Consumer Financial Protection Bureau lawsuit. In that earlier case, Ocwen ended up settling out of court for $2.1 billion.
At that time, Ocwen pledged to reform its practices and treat its consumer base more fairly.
Instead, Ocwen “continued to fall down on the job for borrowers,” said Cara Petersen, a C.F.P.B. lawyer.
[Featured Image by Joe Raedle/Getty Images]
