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.
Responding to the lawsuit, Ocwen accused the CFPB of making "inaccurate and unfounded" claims, in a Thursday statement provided to Morning Consult. And mortgage regulators representing more than 20 states issued separate orders that bar an Ocwen subsidiary from acquiring new mortgage servicing rights and originating additional home loans until the division shows it can properly manage escrow accounts.
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.
Founded in 1988, Ocwen has more than 9,000 employees and services mortgage loans in all 50 states and the District of Columbia. News of the North Carolina actions and the CFPB lawsuit sent shares of Ocwen crashing by almost 60 percent in just over an hour. "Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers". While the CFPB's release doesn't mention Home Equity Conversion Mortgages by name, the bureau claims that Ocwen failed to provide proper information to the heirs of certain borrowers.
The CFPB, the state of Florida, and other state agencies are suing Ocwen or issuing cease-and-desist orders against the company in the joint action filed Thursday.
Ocwen was "unaware" of any comprehensive CFPB review of mortgage servicing practices, the statement said.
"Enough is enough", Bondi said in a statement.
The Florida-based Ocwen, which has serviced almost 1.4 million mortgages on behalf of banks, has not been convicted of any of these alleged violations. "Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment". According to the lawsuit, Ocwen's head of services called the company's technology "an absolute train wreck". 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.
In one case, a borrower with a mortgage modification started having her payments rejected.
"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.