CFPB Sues OCWEN for Failing Borrowers During Mortgage Servicing Process

The Consumer Financial Protection Bureau (CFPB) filed suit against OCWEN, one of the nation’s largest nonbank mortgage companies.  The lawsuit was filed on April 20, 2017.  According to the lawsuit, OCWEN failed borrowers during the mortgage servicing process.  The Consumer Financial Protection Bureau’s Director, Richard Cordray said in a statement,

“Today the Consumer Financial Protection Bureau is filing a lawsuit against Ocwen, one of the nation’s largest nonbank mortgage servicers. We are seeking relief to compensate consumers for years of systemic and significant errors throughout the mortgage servicing process, which cost some of them their homes. We allege that Ocwen calculated loan balances improperly, misapplied borrower payments, and botched escrow and insurance payments. We believe Ocwen failed to properly investigate and fix these problems when people formally complained, and it illegally foreclosed on borrowers. And we believe Ocwen compounded these failures by selling the servicing rights to these loans without fully disclosing or correcting errors in people’s records.”

According to the lawsuit, OCWEN failed borrowers by:

  • Serviced loans using error-riddled information
  • Illegally foreclosed on homeowner by failing to deliver required foreclosure protections. As a result, it is alleged that OCWEN wrongfully initiated foreclosure proceedings on at least 1,000 people, and has wrongfully held foreclosure sales.
  • Failed to credit borrowers’ payments.
  • Botched escrow accounts by failing to properly apply escrow payment.
  • Mishandled hazard insurance:
  • Bungled borrowers’ private mortgage insurance
  • Deceptively signed up and charged borrowers for add-on products
  • Failed to assist heirs seeking foreclosure alternatives
  • Failed to adequately investigate and respond to borrower complaints
  • Failed to provide complete and accurate loan information to new servicers

The CFPB is requesting that OCWEN follow mortgage servicing laws and pay penalties.  You can read the lawsuit at the CFPB website: http://files.consumerfinance.gov/f/documents/20170420_cfpb_Ocwen-Complaint.pdf