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April 20, 2017

CFPB sues mortgage loan servicer for 'failing borrowers at every stage'

The CFPB on Thursday sued one of the largest nonbank mortgage loan servicers, Ocwen Financial Corporation, and its subsidiaries for errors, shortcuts and other tactics that cost borrowers' money and, for some, even their homes.

The bureau said Ocwen failed at basic functions, such as sending accurate monthly statements, properly crediting payments and handling taxes and insurance. Allegedly, the company also illegally foreclosed on borrowers, ignored complaints and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers' records.

The Florida Attorney General took a similar action against Ocwen Thursday in a separate lawsuit. The CFPB also said that many state financial regulators are also independently issuing cease-and-desist and license revocation orders against Ocwen for escrow management and licensing issues.

Ocwen, headquartered in West Palm Beach, Fla., serviced almost 1.4 million loans with an aggregate unpaid principal balance of $209 billion as of Dec. 31. It services loans for borrowers in all 50 states and the District of Columbia. Ocwen handles customer service, collections, loan modifications and foreclosures. It specializes in servicing subprime or delinquent loans.

Along with using error-filled information, illegally foreclosing on homeowners, failing to credit borrowers' payments and botching escrow accounts, the CFPB specifically found that Ocwen also, among other things:

  • mishandled hazard insurance;
  • bungled borrowers' private mortgage insurance;
  • deceptively signed up and charged borrowers for add-on products; and
  • failed to assist heirs seeking foreclosure alternatives.

The CFPB's complaint, filed in federal district court for the Southern District of Florida, seeks a court order requiring Ocwen to follow mortgage servicing law, provide relief for consumers and pay penalties.