WASHINGTON For the second time since 2013, the
U.S. Consumer Financial Protection Bureau on Thursday sued Ocwen
Financial Corp over accusations of widespread misconduct
in how it serviced borrowers' loans, from foreclosure abuses to
a basic failure to send accurate monthly statements.
North Carolina was among at least 20 states that also took
actions against Ocwen. News of the North Carolina actions and
the CFPB lawsuit sent shares of Ocwen crashing by nearly 60
percent in just over an hour.
CFPB officials said that mortgage servicer Ocwen and its
subsidiaries have failed to clean up their act, even after the
CFPB ordered Ocwen in December 2013 to fork over $2 billion in
relief to harmed borrowers because of similar violations.
"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
Florida Attorney General Pam Bondi on Thursday filed a
parallel lawsuit against Ocwen, and at least 20 other state
regulators, including North Carolina, issued regulatory orders
or charges against Ocwen subsidiaries to address violations of
state and federal laws.
In a statement, West Palm Beach, Florida-based Ocwen vowed
to defend itself against the CFPB's "unfounded claims," saying
it had cooperated fully with the bureau's inquiries and that the
regulator was overreaching.
“Ocwen strongly disputes the CFPB’s claim that Ocwen’s
mortgage loan servicing practices have caused substantial
consumer harm," the company said.
Ocwen is one of the country's largest nonbank mortgage
servicers, servicing almost 1.4 million loans.
It added that many of the issues were addressed in its 2013
settlement with the CFPB and that the allegations in the new
complaint represent "only a small percentage of Ocwen’s 1.3
Ocwen shares were last down about 50 percent on the day, on
pace for their largest daily percentage decline ever. Nearly 60
million shares had traded, a record for a single day of trading.
The actions against Ocwen also weighed on shares of two
other mortgage servicing companies, Altisource Portfolio
Solutions SA and New Residential Investment Corp
, which fell by more than 36 percent and 12 percent,
The bureau said some of Ocwen's alleged violations included
illegally foreclosing on homeowners, failing to credit
borrowers' payments, botching escrow accounts, servicing loans
using error-riddled information, and deceptively signing up and
charging borrowers for add-on products.
Many of the 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."
In one case, a borrower with a mortgage modification started
having her payments rejected. She later learned the system was
off by a few cents in how it calculated her new modified monthly
payment, misapplied her payments to the prior month, and caused
her to receive delinquency notices.
"It is very embarrassing to come home and see a notice on my
door of an impending foreclosure especially when I have made and
continue to make my monthly mortgage payments," it quotes the
borrower as saying.