Published: Fri, April 21, 2017
Economy | By Melissa Porter

USA regulator sues Ocwen for 'deceptive practices'; shares plunge

USA regulator sues Ocwen for 'deceptive practices'; shares plunge

"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, who was appointed by President Obama, said in a statement.

As Ocwen grew, it failed to properly integrate the systems of businesses it acquired, and improperly foreclosed on borrowers in some cases, NY regulators headed by Benjamin Lawsky said in their 2014 order.

Ocwen Financial and its subsidiaries faced a slew of accusations from federal and state regulators on Thursday, as the Consumer Financial Protection Bureau and Florida accused it of widespread servicing errors, while 20 states filed separate cease-and-desist orders against the firm for improper handling of consumer escrow accounts.

In one case, a borrower with a mortgage modification started having her payments rejected.

The CFPB's lawsuit alleges a host of violations, including illegally foreclosing on 1,000 borrowers, mishandling escrow accounts, enrolling consumers in add-on programs without their consent, and knowingly populating its mortgage-tracking software with incorrect or incomplete information. Mortgage servicers don't own the mortgage, but are in charge of collecting payments and making sure the accounts are credited correctly. According to the lawsuit, Ocwen's head of services called the company's technology "an absolute train wreck". Those orders prohibit the company from acquiring new servicing rights and the origination of new loans.

In a statement, West Palm Beach, Florida-based Ocwen vowed to defend itself against the CFPB's "unfounded claims", saying it had cooperated fully with the bureau's inquiries and that the regulator was overreaching.

Earlier this year, an Ocwen subsidiary, Ocwen Loan Servicing, signed a $225 million settlement with California regulators to settle allegations it overcharged active-duty military members, was late in providing key information for some civilian borrowers seeking to modify their loans and violated other laws.

The CFPB, the state of Florida, and other state agencies are suing Ocwen or issuing cease-and-desist orders against the company in the joint action filed Thursday.

A spokesman for Ocwen wasn't able to immediately comment on Thursday.

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

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

Kate Berry covers the Consumer Financial Protection Bureau for American Banker.

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