Ocwen: CFPB suit unfounded; shares -52%

Ocwen: CFPB suit unfounded; shares -52%

Numerous errors, the CFPB says, came about through Ocwen's flawed proprietary servicing system that the company's servicing head once referred to as a "train wreck".

"The consumer bureau has uncovered substantial evidence that Ocwen engaged in unfair and deceptive practices", CFPB Director Richard Cordray said, adding that thousands of customers were harmed.

As Ocwen grew, it failed to properly integrate the systems of businesses it acquired, and improperly foreclosed on borrowers in some cases, NY regulators headed by Benjamin Lawsky said in their 2014 order.

Consumer Financial Protection Bureau and the Florida Attorney General's office, along with cease-and-desist orders from several other states.

With regard to private mortgage insurance, the complaint claims Ocwen failed to cancel borrowers' coverage in a timely manner, resulting in overpayments totaling $1.2 million.

Ocwen is one of the country's largest nonbank mortgage servicers, servicing nearly 1.4 million loans.

On April 20, 2017, the Consumer Financial Protection Bureau announced that it was suing Ocwen for generating errors in borrowers' accounts, failing to credit payments, illegally foreclosing on homeowners, and charging borrowers for add-on products without their consent.

While Ocwen changed its policy in April 2015 to address the difficulty its call center had in recognizing and escalating complaints, these changes fell short, according to the complaint.

Ocwen, in a statement, called the consumer agency's allegations "inaccurate and unfounded" and promised to "vigorously defend" against the lawsuit.

In a completely separate move, the state of North Carolina today slapped Ocwen with a cease-and-desist letter that will indefinitely prevent it from acquiring new mortgage servicing rights in the state, as well as originating mortgages that it plans to service.

"If I could change systems tomorrow I would", the Ocwen executive said.

In addition to the lawsuit filed in U.S. District Court in Florida, more than 20 state regulators took action against the company, limiting its operations in their states.

"Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers".

A spokesman for Ocwen wasn't able to immediately comment on Thursday.

According to the North Carolina order, Ocwen told a multi-state investigatory committee that reconciling all its escrow accounts would cost $1.5 billion "and be well beyond Ocwen's financial capacity to fund".

The CFPB says the lawsuit filed Thursday is for violations since that 2013 action.

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