Pam Bondi (J. Albert Diaz)
New troubles are brewing for embattled mortgage loan servicer Ocwen Financial Corp., hit Thursday with two high-profile lawsuits by the Consumer Financial Protection Bureau and Florida Attorney General Pam Bondi.
More fallout immediately followed, with several state financial regulators also issuing license revocations and cease-and-desist orders for alleged escrow management violations, according to the CFPB.
West Palm Beach-based Ocwen is one of the nation’s largest nonbank loan servicers. It handles administrative tasks on behalf of lenders by collecting payments, handling billing and performing other duties. But the federal consumer finance market watchdog accused it of “failing borrowers at every stage” through “years of widespread errors, shortcuts and runarounds.” It claimed Ocwen illegally foreclosed loans, “botched basic functions,” deceptively charged for add-on products, failed to credit borrower accounts and caused homeowners’ insurance coverage to lapse for more than 10,000 customers, among other missteps.
“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.
A federal civil consumer protection lawsuit suit by Bondi and Florida Office of Financial Regulation Commissioner Drew Breakspear raises similar allegations against Ocwen and its subsidiaries, Ocwen Loan Servicing LLC and Ocwen Mortgage Servicing Inc. The complaint in the U.S. District Court for the Southern District of Florida alleges the financial services provider misapplied mortgage payments, bungled loan modifications, collected excessive fees, failed to pay borrowers’ insurance premiums and pursued illegal foreclosures.
“Enough is enough,” Bondi said. “Florida’s distressed Ocwen borrowers should no longer have to endure costly servicing errors and unfair practices.”
Ocwen denied wrongdoing, and said it was “prepared to vigorously defend itself” against the allegations.
“The substantive allegations in today’s suit are inaccurate and unfounded,” spokesman John Lovallo wrote in an email. “The company is unaware of the CFPB conducting any detailed review of Ocwen’s loan servicing files. The CFPB suit is primarily based on the CFPB’s flawed review of data and its self-serving conclusion about isolated instances where Ocwen self-identified ways we can do better.”
The company rebutted claims its practices hurt borrowers, maintaining instead that its work resulted in “substantial benefits to consumers above and beyond other mortgage servicers.”
“Ocwen has been fully cooperative with the CFPB throughout its inquiry, has made all of its loan servicing files and records available, and has tried at every juncture to encourage the CFPB or a neutral third party to review the records and to work out a reasonable and fair resolution to the CFPB’s concerns,” Lovallo said. “However, the CFPB refused to recognize the facts.”
The servicer also confirmed receipt Thursday of orders from state mortgage regulators, and said it would “respond promptly … after a full review.”
“We believe we are properly licensed in all of the states where we conduct business,” Lovallo said.