Monday, April 24, 2017

After Settling Consumer Feds' Lawsuit For $2.1 Billion In 2013, Notorious Bankster Refuses To Clean Up Its Act; Now Gets Slammed With 20+ New Enforcement Actions/Lawsuits By States, Feds Over Similar Charges Revolving Around Alleged Flagrant & Repeated Mortgage Servicing Abuses; Wall Street Responds By Driving Down Defendant's Stock Price By 54%

The New York Times reports:
  • Federal and state regulators unleashed a fusillade of lawsuits and enforcement orders on Thursday [April 20] against the Ocwen Financial Corporation, a large mortgage servicer, aimed at curbing what they said had been years of flagrant and repeated abuses, including illegal foreclosures, deceptive fees and extensive mishandling of customers’ home loan payments.

    Some of the regulatory orders directly questioned Ocwen’s ability to continue operating, and the market responded accordingly: Shares of the company fell 54 percent, closing at $2.49 per share.(1)

    Twenty-two state mortgage regulators filed enforcement orders intended to limit or freeze Ocwen’s ability to acquire new mortgage loans to service in their states. Servicing a loan involves billing customers and funneling payments to the lender; Ocwen, which is not a bank, specializes in doing so for subprime mortgages — home loans issued to people with less-than-stellar credit.

    Wall Street’s mishandling of subprime home loans was a major catalyst of the 2008 financial crisis, in which Ocwen was a player, scooping up troubled loan portfolios to service. But the latest round of accusations stems from activity in recent years.

    In a statement, Ocwen said it was “proud of its corporatewide commitment to a culture of integrity, transparency, compliance and service.”

    The state regulators, however, said the company was failing at some of its most basic duties and needed to be stopped.

    Among the many actions taken against Ocwen on Thursday, the Consumer Financial Protection Bureau [lawsuit here] and Florida’s attorney general filed lawsuits accusing the company of making sloppy mistakes at nearly every stage of the collections process, inflicting frustration and millions of dollars in added costs on borrowers trying to pay back their home loans.

    Ocwen denied the charges, calling them “inaccurate and unfounded.”

    This is Ocwen’s second major run-in with the consumer bureau. In 2013, the company agreed to pay $2.1 billion to settle a similar set of accusations.

    At the time, the company pledged to reform, but instead it has “continued to fall down on the job for borrowers,” said Cara Petersen, a lawyer at the consumer bureau.

    More than 580,000 customers have complained to Ocwen about errors in the last two years, according to the consumer bureau. Some of the company’s “systemic and significant” mistakes cost its customers their homes, Richard Cordray, the bureau’s director, said in a news conference.

    Ocwen, which collects payments from 1.4 million borrowers on mortgage debt of more than $200 billion, said it would review the state regulators’ orders. It intends to fight the consumer bureau’s lawsuit and called it “an unfortunate example of overreaching.”

For more, see Regulators Accuse Subprime Mortgage Servicer of Years of Abuses.

See also:

a) Here's a detailed breakdown of Ocwen's new restrictions by state (A deeper dive reveals what Ocwen can and can’t do going forward).

b) The CFPB Just Sued a Crooked Mortgage Servicer, but Indicted Itself (The lawsuit against Ocwen is welcome, but should have happened four years ago):
  • The picture that emerges from the 93-page [CFPB] lawsuit, based on internal audits, company e-mails, third-party reviews by investors and consultants, and employee testimony, is that Ocwen has no ability to execute the basic functions of mortgage servicing.
(1) See Ocwen shares plunge 54% after suit over 'botched' lending practices.

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