US Sues Ocwen Financial Over Mishandled Mortgages

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The Florida attorney general was expected to file a lawsuit against Ocwen today as well, according to CFPB officials on the conference call, and multiple more states have issued or were about to enact cease-and-desist orders, CFPB officials said. Big banks were eager to shed business known as subprime mortgage servicing, both because of the relatively high levels of capital required to finance it and the investments in staff and systems that would likely be required.

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.

The CFPB alleges Ocwen has "wrongfully initiated foreclosure proceedings on at least 1,000 people".

The actions against Ocwen also weighed on shares of two other mortgage servicing companies, Altisource Portfolio Solutions SA (ASPS.O) and New Residential Investment Corp (NRZ.N), which fell by more than 36 percent and 12 percent, respectively.

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Ocwen said it's still reviewing the state allegations.

A consumer watchdog is cracking down on a mortgage servicing company that it claims illegally foreclosed on homeowners. The CFPB's complaint, filed today, alleged the Ocwen "engaged in significant and systemic misconduct at almost every stage of the mortgage servicing process". The company failed to make good on pledges to improve its mortgage-servicing performance since agreeing to a multistate settlement in 2014, said Bondi, who added, "enough is enough". While not a member, North Carolina examined the committee's findings as part of its routine regulatory operations.

At year-end 2016, Ocwen serviced almost 1.4 million loans with a total unpaid balance of $209 billion, according to CFPB. "Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment". Although she stated she sent the checks in one envelope, Ocwen records showed the company received and processed the payments on different days, the CFPB found. As a result, she said the company "changed her status to delinquent in May 2016, charged her late fees, and made disruptive and embarrassing collection calls to her at her home and work", the CFPB lawsuit alleged. The frustrating and expensive experience of one consumer cited in the CFPB lawsuit illustrated the problems some borrowers confronted when dealing with Ocwen.

"The CFPB suit is primarily based on the CFPB's flawed review of data and its self-serving conclusion about isolated instances where Ocwen self-identified ways we can do better", the company said.

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