Search

CFPB Promises Extra Scrutiny For Ocwen after Lawsuit

by devteam December 21st, 2013 | Share

One settlement and one enforcementrnaction have been announced in the last 24 hours and they are going to cost twornfinancial institutions a lot of money. rnThe enforcement action, announced Thursday by Consumer FinancialrnProtection Bureau (CFPB) Director Richard Cordray, was brought by authoritiesrnin 49 states and the District of Columbia as well as CFPB against Ocwen FinancialrnCorporation and its subsidiary Ocwen Loan Servicing.  The settlement announced Friday is betweenrnthe Federal Housing Finance Agency (FHFA) and Deutchbank AG related companies.</p

The court order against Ocwen whichrnwas filed in federal district court and agreed to by the company, demands that itrnrefund $125 million to compensate people who have already lost their homes throughrnwhat Cordray called “years of systematic and significant servicing errors.”  The court filing also demands that Ocwen providern$2 billion in relief to current homeowners who are underwater and in danger ofrnlosing their homes.  </p

In prepared remarks for a pressrnbriefing about the Ocwen action, Cordray said the servicer specializes inrnsubprime or delinquent loans and it has been greatly expanding its business inrnthe years since the housing collapse.  Itrnis now the largest nonbank servicer and the fourth-largest mortgage servicerrnoverall in the country.  Not only has it acquired smaller competitors, itrnhas taken on servicing duties for the some of the big banks and now hasrncustomers in the millions. </p

The Director said that, for manyrnborrowers, Ocwen was not their first servicer but that CFPB believes that toornoften trouble began as soon as a loan was transferred to Ocwen and the companyrnfailed to honor trial modifications that were agreed upon by previousrnservicers.  He said he believes thatrnOcwen violated federal consumer financial laws at every stage of the mortgagernservicing process.  The complaint allegesrnthe company took advantage of consumers with servicing shortcuts andrnunauthorized fees, misled consumers about alternatives to foreclosures, providedrnfalse or misleading information to consumers about the status of their accountsrnand denied loan modifications for eligible homeowners.  It also sent robo-signedrnforeclosure documents through the courts.</p

The $125 million in monetaryrncompensation will go to consumers who lost their home to foreclosure whilernbeing serviced between 2009 and 2012 by Ocwen or by Homeward ResidentialrnHoldings and Litton Loan Servicing which Ocwen acquired.  In addition Ocwen must complete sustainablernloan modifications over the next three years that result in a reduction inrnprincipal totaling $2 billion for homeowners who are underwater and strugglingrnto pay off their mortgages.  </p

Cordray pointed out that in lessrnthan a month, the Bureau’s new mortgage servicing rules will take effect andrnOcwen, like other servicers, will be subject to the new standards which, inrnmany ways overlap the enforcement action. rnHowever, because of its conduct, Ocwen will be subject to standards and scrutinyrnabove and beyond the rest of the industry.  

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs
Share

Comments

Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...