Financial Advice

Interesting Investigative Details About Ocwen

Yesterday the Consumer Financial Protection Bureau, that President Trump would like to stamp out, filed suit against Ocwen Financial Corporation and alleged “Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance.”

Well it turns out the State of Connecticut had also conducted an investigation into Ocwen Loan Servicing and Ocwen Business Solutions. The results of the investigation paint an outsourced job scenario and depressing picture for little things like accuracy.

The State of Connecticut said:

“Ocwen is a Delaware limited liability company with its main office at 1661 Worthington Road, Suite 100, West Palm Beach, Florida. OBS is a corporation with a business address at Two E-Com Center, Harbor Drive, Mall of Asia Complex, Pasay City, Philippines. Ocwen Financial Solutions Private Limited (NMLS #15877) (“OFSPL”) is an entity with a business address at Pritech Park, Block 12, Bellandur Village, Bangalore, India.

On June 18, 2015, the Division commenced a limited scope off-site examination of Ocwen, which continued through October 26, 2016 (“CT Examination”). The CT Examination covered the period from January 2012 to October 2016 and reviewed Ocwen’s financial condition and complaints from Connecticut borrowers concerning Ocwen’s mortgage loan servicing practices in Connecticut.

The CT Examination revealed, from at least January 2013 to October 2016, the existence of numerous errors and deficiencies in Ocwen’s handling of residential mortgage loan payments and escrow accounts maintained on behalf of Connecticut borrowers for property taxes and insurance. The CT Examination concluded that regulatory compliance in the area of escrow account management was deficient.

In October 2016, examiners requested escrow account reconciliations for the escrow accounts maintained on behalf of Connecticut borrowers. In response, Ocwen indicated that it has approximately 1,900 custodial bank accounts relating to approximately 17,800 residential mortgage loans in Connecticut, along with mortgage loans of residential property located in other states, for which it maintains escrow accounts. Upon selection of approximately 20 Connecticut borrowers’ accounts, Ocwen only provided aggregate bank account reconciliations and failed to provide adequate information reconciling borrower escrow account trial balances to bank account balances. Ocwen failed to provide evidence that Connecticut borrowers’ monies are adequately accounted for and segregated from all other monies.

The CT Examination also found that from at least January 2015 to October 2016, Ocwen misapplied residential mortgage loan payments to Connecticut borrowers’ residential mortgage loan accounts and misapplied payments to or from Connecticut borrowers’ escrow accounts. For example, in April 2015, Ocwen applied a Connecticut borrower’s monthly mortgage payment completely to escrow, rather than allocating the payment across principal, interest and escrow, and in May 2015, Ocwen applied a Connecticut borrower’s mortgage payment completely to principal, rather than allocating the payment across principal, interest and escrow. On another occasion in February 2015, Ocwen disbursed monies from a Connecticut borrower’s escrow account for insurance when the residential mortgage loan was being escrowed for payment of property taxes only.

The misapplication of residential mortgage loan and escrow payments by Ocwen caused harm to Connecticut borrowers through unearned late fees being charged and inaccurate adverse credit reporting.

From at least January 2013 to January 2014, Ocwen failed to provide a short year statement in connection with at least one Connecticut borrower’s escrow account upon payoff of the residential mortgage loan.

Effective December 30, 2011 to January 9, 2014, 12 CFR § 1024.17(i)(4)(iii) (RESPA) provided, in pertinent part, that “[i]f a borrower pays off a mortgage loan during the escrow account computation year, the servicer shall submit a short year statement to the borrower within 60 days after receiving the pay-off funds.”

From at least February 2014 to December 2014, Ocwen failed to pay hazard insurance or property taxes when due on behalf of Connecticut borrowers although such borrowers’ escrow payments were timely made to Ocwen.

Effective January 10, 2014, 12 CFR § 1024.17(k)(1) (RESPA) provided, in pertinent part, that “[i]f the terms of any federally related mortgage loan require the borrower to make payments to an escrow account, the servicer must pay the disbursements in a timely manner, that is, on or before the deadline to avoid a penalty, as long as the borrower’s payment is not more than 30 days overdue.”

The CT Examination also found that from at least January 2015 to October 2016, Ocwen failed to provide to Connecticut borrowers a schedule of the ranges and categories of its costs and fees concerning servicing-related activities in connection with all residential mortgage loans for which servicing rights were assigned to Ocwen after January 1, 2015. At the time of the CT Examination, Ocwen was still working on the form of the disclosure and expected that a letter disclosing such costs and fees would be approved for production and distribution to Connecticut borrowers in February 2017.

From at least January 2015 to October 2016, Ocwen failed to maintain all records pertaining to the servicing of residential mortgage loans including, but not limited to, correspondence received from Connecticut borrowers and privacy notices provided to Connecticut borrowers.

From at least January 2015 to May 2016, Ocwen acted as a mortgage servicer in Connecticut from several locations that were neither licensed nor exempt from licensure. From at least January 2015 to March 2016, Ocwen acted as a mortgage servicer through OBS from Manila or Pasay City in the Philippines and through OFSPL from Bangalore, Pune or Mumbai in India. At all times relevant hereto, OBS conducted call or contact center activities on behalf of Ocwen, with a focus on assisting Connecticut borrowers that primarily speak Spanish.

By e-mail dated May 4, 2016, Ocwen represented that the following locations were sites from which it currently serviced Connecticut loans: the Main Office; 1525 S. Belt Line Road, Coppell, Texas (NMLS # 1078974); 1100 Virginia Drive, Fort Washington, Pennsylvania (NMLS # 1026250); and 3451 Hammond Avenue, Waterloo, Iowa (NMLS # 1027153). Of such locations, Ocwen only maintained a Connecticut mortgage lender license for the Main Office location at such time.

By e-mail dated October 7, 2016, Ocwen represented that all call activity in connection with its mortgage servicing operations was transitioned to personnel located within the continental United States as of March 2016, and that OBS and OFSPL no longer supported residential mortgage loans in Connecticut.

From at least December 2015 to March 2016, Ocwen provided incorrect or incomplete information on at least one occasion to a Connecticut borrower concerning the borrower’s pending foreclosure action, in part due to multiple representatives of Ocwen handling the borrower’s calls.”

CT Issues Temporary Cease and Desist Order Against Ocwen

On April 20, 2017 the following Cease and Desist instructions were given to Ocwen.

“Upon the effective date of this Temporary Order to Cease and Desist, Ocwen Loan Servicing, LLC shall not pay or declare any dividend or bonus, or otherwise authorize any other material distribution of Ocwen Loan Servicing, LLC’s assets to any officer, director or owner of Ocwen Loan Servicing, LLC without the prior written approval of the Commissioner until Ocwen Loan Servicing, LLC can demonstrate to the satisfaction of the Commissioner that escrow monies of borrowers of Connecticut residential mortgage loans are properly accounted for and segregated for the benefit of such borrowers as further provided herein;

Upon the effective date of this Temporary Order to Cease and Desist, Ocwen Loan Servicing, LLC shall not add any Connecticut residential mortgage loan to its existing mortgage loan servicing portfolio if such residential mortgage loan requires funds to be held in escrow for payment of taxes and insurance until Ocwen Loan Servicing, LLC can demonstrate to the satisfaction of the Commissioner that, for all existing escrow accounts maintained on behalf of borrowers of Connecticut residential mortgage loans: (a) funds are appropriately collected and maintained in one or more segregated deposit or trust accounts for the benefit of such Connecticut borrowers, (b) funds are accurately applied to borrower escrow account balances, (c) escrow amounts are appropriately calculated and accurately and timely disbursed, and (d) its escrow account management practices comply with all applicable federal and state laws and regulations;”

The State felt Ocwen had engaged in the following actions and behavior so they should face the following ramifications.

“Ocwen acted as a mortgage servicer from at least three locations that were neither licensed nor exempt from licensure, as more fully described in paragraphs 1, 2, 8 to 11, inclusive, and 23 to 25, inclusive, of the Matters Asserted, in violation of Section 36a-718 of the Connecticut General Statutes. Such conduct forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen acted as a mortgage servicer from at least three locations that were neither licensed nor exempt from licensure, as more fully described in paragraphs 1, 2, 8 to 11, inclusive, and 23 to 25, inclusive, of the Matters Asserted, which constitutes conducting business covered by Sections 36a-715 to 36a-719l, inclusive, without holding a valid license as required under said sections or assisting another person in the conduct of business without a valid license as required under Title 36a, in violation of Section 36a-719h(17) of the Connecticut General Statutes in effect at such time. Such conduct forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen knowingly misapplied or recklessly applied residential mortgage loans payments to the outstanding balance of a Connecticut borrower’s residential mortgage loan on at least one occasion, as more fully described in paragraphs 15 and 16 of the Matters Asserted, in violation of Section 36a-719h(4) of the Connecticut General Statutes in effect at such time, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen failed to accurately apply residential mortgage loans payments of Connecticut borrowers on at least two occasions, as more fully described in paragraphs 15 and 16 of the Matters Asserted, in violation of the Prior Consent Order issued by the Commissioner, which forms the basis to issue an order to cease and desist pursuant to Section 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Section 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen knowingly misapplied or recklessly applied payments to escrow accounts of a Connecticut borrower on at least one occasion, as more fully described in paragraphs 15 and 16 of the Matters Asserted, in violation of Section 36a-719h(5) of the Connecticut General Statutes in effect at such time, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen failed to disclose to Connecticut borrowers the schedule of the ranges and categories of its costs and fees for its servicing-related activities in connection with Connecticut residential mortgage loans for which it was assigned servicing rights after January 1, 2015, as more fully described in paragraph 21 of the Matters Asserted, in violation of Section 36a-719e(2) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen failed to maintain sufficient records in connection with the servicing of residential mortgage loans in Connecticut, including providing adequate evidence that Ocwen’s escrow accounts complied with the requirements of Section 36a-716 of the Connecticut General Statutes, as amended by Public Act 16-65, as more fully described in paragraphs 14 and 22 of the Matters Asserted, in violation of Section 36a-719d(b) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen failed to provide a short year escrow statement to a borrower as required pursuant to 12 CFR § 1024.17(i)(4)(iii), as more fully described in paragraphs 17 and 18 of the Matters Asserted, in violation of Section 36a-498e(7) of the Connecticut General Statutes, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen failed to pay escrow disbursements to the appropriate taxing authorities and insurance companies in the amounts required and at the times such payments were due, as more fully described in paragraphs 15 and 19 of the Matters Asserted, which constitutes at least two violations of Section 36a-716(a) of the Connecticut General Statutes in effect at such time, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

Ocwen provided incorrect or incomplete information to a Connecticut borrower concerning the borrower’s pending foreclosure action, as more fully described in paragraph 26 of the Matters Asserted, which constitutes misrepresenting or omitting material information in connection with the servicing of the residential mortgage loan, in violation of Section 36a-719h(2) of the Connecticut General Statutes in effect at such time, which forms the basis to issue an order to cease and desist pursuant to Sections 36a-719j(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty pursuant to Sections 36a-719j(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon Ocwen in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.

OBS acted as a collection agency from at least one location that was neither licensed nor exempt from licensure, as more fully described in paragraphs 1, 3, 11, 23 and 25 of the Matters Asserted, in violation of Section 36a-801(a) of the Connecticut General Statutes in effect at such time. Such conduct forms the basis to issue an order to cease and desist against OBS pursuant to Sections 36a-804(b) and 36a-52(a) of the Connecticut General Statutes, and to impose a civil penalty against OBS pursuant to Sections 36a-804(b) and 36a-50(a) of the Connecticut General Statutes. Section 36a-50(a) of the Connecticut General Statutes authorizes the Commissioner to impose a civil penalty upon OBS in an amount not to exceed One Hundred Thousand Dollars ($100,000) per violation.” – Source

Steve Rhode
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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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