You might think that after reaching a $2.1-billion settlement to resolve allegations of problems with its loan-processing operations and mistreatment of homeowners facing foreclosure, mortgage servicing giant Ocwen would take steps to make sure these problems never occurred again.
Unfortunately, you would be wrong.
It seems that not much has changed over the past four years.
The Consumer Financial Protection Bureau is once again suing Ocwen for illegally foreclosing against at least 1,000 borrowers and adding bogus fees to statements. The bureau also alleges that the company “botched basic mortgage functions like sending accurate monthly statements, crediting payments, and handling taxes and insurance from escrow accounts,” according to a statement.
Many of the errors, said the CFPB, came about because Ocwen has a proprietary servicing system known as REALServicing, which the company’s head of servicing, frustrated by problems with the system, referred to as an “absolute train wreck.”
According to Bloomberg, the company has received error notices and complaints from more than 300,000 borrowers since April 2015. Considering that Ocwen is collecting payments on around 1.4 million mortgages, the company’s complaint rate is extraordinarily high.
“Notably, consumers are stuck with their mortgage servicer regardless of how they are treated,” CFPB Director Richard Corday told reporters. “In this market, consumers cannot choose simply to take their business elsewhere.”
Ocwen, for its part, alleges that the CFPB’s lawsuit is not necessarily motivated by what’s good for consumers.
“Today’s suit can only be viewed as a politically motivated attempt by the CFPB to grab headlines in reaction to the change of administration and recent scrutiny of the CFPB’s activities,” said the company. “Ocwen strongly disputes the CFPB’s claim that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm.”
House Financial Services Committee Chairman Jeb Hensarling plans to propose a major overhaul of the Dodd-Frank Act, which will remove much of the CFPB’s regulatory powers.
The CFPB isn’t the only organization taking Ocwen to task for these alleged shortcomings. Florida is suing the company in a separate lawsuit. At least 20 other state regulators have issued regulatory orders or charges against Ocwen subsidiaries to address violations of state and federal laws.