The Consumer Financial Protection Bureau (CFPB) sued mortgage loan servicing company Ocwen Financial Corporation for significant and systematic misconduct at every stage of the mortgage servicing process that has hurt borrowers.
CFPB alleges that Ocwen botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance. Allegedly, Ocwen also illegally foreclosed on struggling borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records.
“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. “Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment.”
CFPB’s complaint, filed in federal district court for the Southern District of Florida, seeks a court order requiring Ocwen to follow mortgage servicing law, provide relief for consumers, and pay penalties. The complaint is not a finding or ruling that the defendants have violated the law.
West Palm Beach, Florida-based Ocwen is one of the nation’s largest nonbank mortgage servicers, servicing almost 1.4 million loans in all 50 states with an aggregate unpaid principal balance of $209 billion. Ocwen specializes in servicing subprime or delinquent loans.
According to the suit, CFPB specifically alleges that Ocwen serviced loans using error-riddled information, illegally foreclosed on homeowners, failed to credit borrowers’ payments, botched escrow accounts, mishandled hazard insurance, and bungled borrowers’ private mortgage insurance. The bureau also alleges that the company deceptively signed up and charged borrowers for add-on products, failed to assist heirs seeking foreclosure alternatives, failed to adequately investigate and respond to borrower complaints, and failed to provide complete and accurate loan information to new servicers.
CFPB also claims that Ocwen failed to remediate borrowers for the harm it has caused.
The Florida Attorney General filed a separate lawsuit against the company.
Twenty-two state mortgage regulators have independently issuing cease-and-desist and license revocation orders against Ocwen for escrow management and licensing issues.
The orders are the culmination of several years of examinations and monitoring by multiple state regulatory agencies that revealed the company is mismanaging consumer mortgage escrow accounts. The company has also operated unlicensed mortgage servicing facilities in certain states in apparent violation of state licensing statutes. The Conference of State Bank Supervisors (CSBS) said.
“This multi-state effort is a testament to the states’ ability to regulate large companies across the country while ensuring compliance with applicable state and federal law, and protecting consumers,” CSBS President and CEO John Ryan said.