Feds: Big mortgage servicer illegally foreclosed on homeowners
NEW YORK - State and federal authorities are suing Ocwen Financial (OCN), saying the loan servicer illegally foreclosed on at least 1,000 U.S. homeowners and mishandled millions of mortgage accounts.
The Consumer Financial Protection Bureau (CFPB) said Thursday that Ocwen made errors in borrowers’ accounts, failed to credit payments, foreclosed improperly and charged borrowers for add-on products without their consent. The CFPB, the state of Florida, and other state agencies are suing Ocwen or are issuing cease-and-desist orders against the company.
“Ocwen’s years of widespread errors, shortcuts and runarounds cost some borrowers money and others their homes,” the CFPB said in a news release announcing a lawsuit against the company.
The bureau accuses Ocwen of enaging in “significant and systemic misconduct at nearly every stage of the mortgage servicing process,” including illegally foreclosing on people who had modified their home loans. (Banks sometimes offer loan modifications when homeowners have trouble paying their mortgage, either by lowering the loan’s interest rate or extending its repayment term.)
Ocwen, the government alleged, sometimes foreclosed on homeowners who were fulfilling their obligations under a modified loan. In other cases, the servicing firm foreclosed on people who had started to apply for a loan modification before they had finished, the government said.
Ocwen also allegedly failed to pay home insurance premiums for borrowers, as it is required to do, causing home insurance to lapse for about 10,000 people, and didn’t cancel borrowers’ private mortgage insurance in a timely way, making them overpay for their loans, according to the CFPB.
Regulators said when consumers complained, Ocwen routinely failed to acknowledge or investigate the complaints.
The company is one of the nation’s largest non-bank mortgage lenders, focusing mostly on subprime and delinquent mortgages. It serviced 1.4 million loans worth roughly $209 billion.
Twenty state regulators blocked Ocwen Thursday afternoon from acquiring new business, Bloomberg News reported.
The company’s share price fell by 53 percent, to $2.52, after the regulators’ action was announced.