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Ocwen Sued by federal government over mishandling mortgage loans

Today, April 20, 2017, U.S. and state officials sued Ocwen Financial Corp., a mortgage service, for its widespread mishandling of mortgage payments and illegally foreclosing.

The Consumer Financial Protection Bureau press release stated:

"The Consumer Bureau is authorized by law to protect consumers from unfair, deceptive, or abusive acts or practices by mortgage servicers of all kinds. In addition, to address widespread problems in this industry, the Bureau adopted common-sense rules for the mortgage servicing market that first took effect in January 2014. The rules include strong protections for struggling homeowners, including those facing foreclosure, and are meant to stop problems like those found here. The Consumer Bureau has uncovered substantial evidence that Ocwen engaged in unfair and deceptive practices and also committed numerous violations of the Bureau rules. We allege that these violations of the law were significant and systemic, and that they harmed thousands of consumers.

In another press release, the North Carolina Commissioner of Banks said:

“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…We cannot allow this to continue."

Ocwen quickly denied the claims saying, they were "inaccurate and unfounded." However, its stock price plummeted more than 50% today, the most in 30 years. A link to the stock price is here:

Ocwen also said, “Today’s suit can only be viewed as a politically-motivated attempt by the Consumer Financial Protection Bureau to grab headlines in reaction to the change of administration and recent scrutiny of the CFPB’s activities," the company said. Apparently, Ocwen is disgruntled since it submitted a plan to a group of more than 20 state regulators in January to fix the escrow accounts it screwed up, and said that reconciling the accounts would cost $1.5 billion, and would be:

“"well beyond Ocwen’s financial capacity to fund."”

The North Carolina cease and desist order also said that if Ocwen properly accounted for known or anticipated regulatory penalties and required operational fixes, “it would indicate that Ocwen continuing as a going concern would be in doubt.” The company’s shares fell as much as 61 percent to $2.12 at one point today.

Ocwen had been growing rapidly after the financial crisis, From 2009 through the end of 2013, its business jumped eight-fold, as measured by loans it was collecting on, according to a separate 2014 consent order from New York. It seemed to have capitalized when big banks were eager to get rid of their subprime mortgage servicing. Ocwen came in to fill the gap.

But as Ocwen grew, it got sloppy and improperly foreclosed on borrowers in some cases, according to legal documents filed by New York regulators in 2014. That New York order forced William Erbey, then executive chairman, to step down from his role at Ocwen. Ocwen also agreed to provide $150 million in relief for borrowers in that case.

We are currently investigating Ocwen's credit reporting and debt collection practices. If you have a situation with Ocwen, or know someone who does, have them give us a call