Firm With History Of Some Controversy Gets Freddie Mac Loan Servicing Contract

ProPublica reports:

• Last month, Freddie Mac introduced a pilot program designed to guide 5,000 homeowners with high-risk mortgages through the loan-modification process, but it outsourced the job to [Ocwen Financial Corp.,] a subprime loan servicer with a history of customer dissatisfaction and run-ins with the federal government.(1)

ProPublica’s Alexandra Andrews reports on the past problems Ocwen Financial Corp. has had in its private and government business dealings.

For more, see Freddie Mac Loan Contractor Has Spotty Record.

(1) Among its run-ins with the federal government, according to the story, Ocwen got a lucrative contract in 2003 to manage and sell thousands of foreclosed properties owned by the Department of Veterans Affairs, but a report from the Government Accountability Office in 2007 panned Ocwen's performance and said the "VA also has not been satisfied with Ocwen's performance": Ocwen racked up $1.3 million in penalties from the VA in the last three quarters of 2005 (at the height of the housing boom) for failing to meet sales targets. There were other problems too: Ocwen charged the VA for home-upkeep repairs that were never made, the GAO reported. Houses fell into disrepair and were covered in "trash and debris," which the GAO suspects might have lowered property values.