CFPB, States Take Legal Action Against Mortgage Servicer Ocwen
The Consumer Financial Protection Bureau and 20 state regulators on Thursday took legal action against mortgage servicing giant Ocwen over allegations that the company dropped the ball on normally simple practices, which allegedly cost up to 1,000 customers their homes because of unwarranted foreclosures.
The CFPB’s lawsuit against the West Palm Beach, Fla.-based firm alleges widespread incompetence and negligence cost consumers money or their homes. Ocwen is one of the largest non-bank mortgage servicing companies in the country, and many of its clients hold subprime mortgages.
On a Thursday call with reporters, CFPB Director Richard Cordray accused Ocwen of “years of systemic and significant errors throughout the mortgage servicing process.”
In its complaint, the bureau claims Ocwen did not properly address complaints about mortgage servicing from customers over a period lasting several years, nor did the company’s leadership listen to other executives who warned about inaccurate information caused by systemic failures in a proprietary software system aimed at streamlining the servicing process.
Because of the problems with that servicing system, Cordray told reporters, Ocwen employees were forced to manually process servicing data. This allegedly led to further balance calculation errors that compounded problems facing consumers.
Responding to the lawsuit, Ocwen accused the CFPB of making “inaccurate and unfounded” claims, in a Thursday statement provided to Morning Consult.
“In fact, just the opposite is true,” the company’s statement read. “Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers.”
Ocwen was “unaware” of any comprehensive CFPB review of mortgage servicing practices, the statement said. Instead, the company accused the consumer watchdog of conducting a “flawed review of data” and reaching a “self-servicing conclusion about isolated instances where Ocwen self-identified ways we can do better.”
The CFPB filed its complaint in the U.S. District Court for the Southern District of Florida.
Florida Attorney General Pam Bondi (R) on Thursday filed a separate federal suit against Ocwen before the same court. Regulatory agencies in North Carolina and other states issued cease-and-desist orders related to Ocwen’s conduct. The company’s stock price has fallen more than 50 percent for the day, with about a half-hour remaining of trading.
The suit is not related to a 2013 CFPB consent order that required Ocwen to pay damages to borrowers who were affected by other systemic failures in mortgage servicing.
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