Mortgage manager Ocwen botched loans so badly his own boss called his system a train wreck, CFPB says

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The Consumer Financial Protection Bureau on Thursday sued Ocwen Financial Corp., one of the nation’s largest mortgage managers, alleging the company engaged in “serious and systemic misconduct” that caused the loss. from their home to borrowers.

In addition to the lawsuit in US District Court in Florida, more than 20 state regulators have filed lawsuits against the company, limiting its operations in their states.

The double action caused the company’s stock to fall nearly 54% on Thursday. Shares edged up 0.8% to $ 2.52 on Friday morning.

The Federal Consumer Agency alleged that Ocwen ran an error-filled transaction that failed to credit borrower payments, sent inaccurate statements, and failed to make insurance payments on time, resulting in loss of blanket.

The West Palm Beach, Florida company has also been accused of unlawfully triggering the foreclosure of at least 1,000 consumers and relying on a loan servicing system that even an Ocwen executive called “ridiculous.” And “train wreck,” the office said in a statement. Press release.

“Ocwen has repeatedly made mistakes and taken shortcuts every step of the way in the mortgage management process, costing some consumers money and others their homes,” office manager Richard Cordray said in a statement.

Ocwen, in a declaration, called the claims of the consumer protection agency “inaccurate and unfounded” and pledged to “defend vigorously” against the lawsuit.

“The CFPB’s lawsuit is primarily based on the misinterpretation of CFPB data and its self-serving conclusion on isolated cases where Ocwen has identified ways to do better,” the company said.

The North Carolina Office of the Banking Commissioner mentionned the majority of state actions prevent the company from acquiring additional mortgage management rights or making loans until Ocwen can properly manage its existing escrow accounts.

In a cease-and-desist order, the North Carolina commissioner said that according to a business plan submitted by Ocwen to state regulators, the company may not be able to stay afloat if it solved its problems, given the considerable costs of upgrading its systems. and the regulatory penalties provided for.

Ocwen said she received the orders from state regulators and “is reviewing them in detail.”

The alleged problems of the office of consumption within the company are wide ranging and include ignoring consumer complaints, misleading people for complementary products, and messing up the foreclosure process.

For example, Ocwen excluded borrowers before considering their loss mitigation claims and even excluded people who were accepted and fulfilling their obligations under the program, the office alleged. In some cases, Ocwen asked borrowers for more information and gave them 30 days to submit it, but was excluded before that date.

In its lawsuit, the CFPB said Ocwen’s use of an internal system, known as REALServicing, exacerbated the problems. The system frequently failed and generated errors, forcing workers to use manual workarounds that simply produced further inaccuracies, the agency said.

As of Dec.31, Ocwen had managed nearly 1.4 million loans with an outstanding principal balance of $ 209 billion, according to the Office of Consumer Affairs.

In February, Ocwen struck a separate deal with California regulators and agreed to pay Californians $ 225 million in repayments and loan cancellation to settle allegations that botched practices led to violations of federal and state rules. in mortgage matters in recent years.

The deal allowed the company to add new California mortgages to its books, which it had been banned since January 2015.

Federal and state government actions are the last black eye for Ocwen, which has grown into one of the nation’s largest non-bank mortgage companies after the real estate crash, but has been overwhelmed by regulatory issues and consumer complaints.

In 2013, it struck a $ 2.1 billion nationwide deal with 49 states and the Federal Office of Consumer Affairs over the types of issues described in Thursday’s lawsuit.

Times writer James Rufus Koren contributed to this report.

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UPDATES:

April 21, 9:15 a.m .: This article has been updated with Owen’s share price and additional details on the CFPB lawsuit.

This article was originally published on April 20 at 1:25 p.m.

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