[OCWEN CUSTOMER?... See the important information for Ocwen customers at the end of this post!]
Ocwen was one of the largest mortgage servicers in the United States. Millions of homeowners mail their mortgage payments to the company each month. If you are simply mailing in your payment and are never a day late, chances are won’t encounter a problem. Request a modification, try to make a pre-payment, or have an issue with escrows and you likely fall into a black hole.
Some borrowers never seem to be able to crawl out of that hole.
As a whistleblower law firm, we have spoken with several Ocwen employees. They are great people. Unfortunately, they are overworked and the company’s customer service is woefully understaffed. More importantly, it doesn’t appear that the company has bothered building the necessary communications infrastructure to handle millions of borrowers. That means if you have a question or need help, Ocwen probably won’t answer their phone or be able to provide assistance.
Ocwen’s customer service problems have caught the attention of regulators. In the last several weeks, Ocwen has been besieged with bad news. This time the bad news comes from 20 state regulators.
Massachusetts was the most recent state to act. On April 30th, regulators effectively tossed the company out of the Massachusetts market. The state’s Division of Banks prohibited Ocwen from acquiring or originating new loans and prohibited it from servicing any existing mortgages in the state. The company will have to find other servicers to handle Massachusetts borrowers.
Massachusetts’ actions come less than 2 weeks after 20 other states led by North Carolina issued cease and desist orders against Ocwen. That multi-state action came after state investigators found widespread abuses in the way the company handles home loans.
The states say that Ocwen agreed in December to hire an auditing firm to do a comprehensive review of borrower escrows. They say that just one month later in January, Ocwen reneged on the deal and instead proposed that it just audit 457 out of 2.5 million accounts.
The recent spate of state regulatory actions followed years of class action litigation and several huge settlements with regulators. In December 2013, the State of California announced a $2.1 billion settlement with the company. That settlement was joined by 48 other states.
Last year a whistleblower lawsuit filed by two insiders, one of whom worked as a home retention specialist with Ocwen, was resolved for another multi-million dollar penalty. The lawsuit claimed that Ocwen was not complying with the government’s Home Affordable Modification Program (HAMP). Instead of helping folks stay in their homes, Ocwen was pocketing the HAMP monies. That case settled last June for $30 million dollars.
Finally, it appeared that everyone had enough!
We hoped that Ocwen would seek a buyer, someone to take over all the loans in its portfolio and service its loans properly. That makes the most sense for homeowners, the trusts that hold the mortgages and the approximately 15,000 women and men who work there.
Except for the senior management, most of Ocwen’s workers are solid individuals trying to do the right thing. The company just hasn’t given them the right tools. That causes frustration for both homeowners and employees.
Ocwen Fights Back - Massachusetts
We were disappointed to learn over the last several days that Ocwen is fighting back.
Ocwen has asked the courts to overturn Massachusetts’ cease and desist order. In a court filing, Ocwen claims the order will cause “significant harm” to its customers.
As if Ocwen isn’t the real cause of harm to customers!
What started as a regulatory order from the Massachusetts Division of Banks has turned into a full-fledged court battle. And now state Attorney General Maura Healey is jumping into the fray.
In what should come as no surprise to many Ocwen customers, Healey charges that the servicing giant has ripped off homeowners in a variety of ways including:
- Overcharged Fees: Ocwen paid fees and commissions to companies affiliated with Ocwen, even though those companies did little or no work. That means higher charges to already struggling borrowers,
- Improperly Administering Insurance Escrows: Ocwen failed to take insurance premiums from escrow causing the borrower’s insurance policies to lapse. Worse, often Ocwen would purchase force-placed insurance at exorbitant rates. These policies typically afford minimal coverage, have high deductibles and cause monthly mortgage payments to soar.
- Unnecessary Flood Insurance: The state says Ocwen forced some borrowers to obtain flood insurance even when there was no need.
- Charging Inflated Fees to Borrowers in Default: Ocwen took advantage of struggling borrowers by ordering unnecessary and duplicative title search, property inspection and property maintenance services. Those fees are passed on to borrowers, of course.
- Poor Customer Service: Ocwen failed to properly explain charges to borrowers and failed to provide an effective method for borrowers to contest those charges.
Healey says the company engaged in widespread abusive practices. “It is alarming that one of the nation’s largest mortgage loan servicers has proven itself to be incapable of properly handing homeowners’ mortgages in Massachusetts,” Healey said. “Borrowers are entitled to fair, competent, and accurate handling of their mortgage and escrow accounts. We remain committed to helping homeowners avoid improper charges and abusive foreclosure practices.”
Ocwen Fights Back Nationally
Ocwen isn’t just taking on Massachusetts. On May 3rd, the company filed an 8-K report with the SEC. Despite dozens of states trying to shut down the company, Ocwen’s CEO Ronald Faris reported:
“One area where we continue to invest is in strengthening our risk and compliance infrastructure. Numerous external and internal compliance reviews over the past year show the strength of our control structure. For example, each of the last four quarters of testing in 2016 by our independent internal review group confirmed that none of the tested National Mortgage Settlement metrics were out of tolerance. Despite recent regulatory allegations, which we believe unfairly characterize our progress and current performance, our recent reviews have not identified past or present systematic issues with our foreclosure sale processes, which is always a last resort for us. I am especially proud of the strong modification results during the quarter which helped over 18,000 struggling families. The financial crisis has not ended for many families in this country, and the Ocwen team continues to provide caring solutions that work.”
Lewis Carroll, the author who penned the Alice and Wonderland classic in 1865, couldn’t dream up such fantasy. Helping homeowners? Strengthening compliance? No issues with foreclosure issues?
Faris statements make him look like the captain of the Titanic. While the ship is sinking and thousands are drowning, Faris re-arranges the deck chairs and declares that his ship is unsinkable.
Ocwen isn’t unsinkable.
Call for Ocwen Whistleblowers
The federal False Claims Act pays cash awards to whistleblowers with inside information about fraud involving government programs. Those awards are based on a percentage of whatever the government collects.
Ocwen once was in the banking business. Today it makes most of its money from loan servicing, not underwriting.
Most loans today are securitized and pooled together. The loans are purchased by institutional investors. Although you may have obtained your mortgage from Bank of America, Wells Fargo or some other bank, there is a high priority that your loan was sold shortly after it was closed.
Companies like Ocwen are hired to “service” these loans as the trusts that own the pool of loans have no office and no staff. As a servicer, Ocwen collects the mortgage payment, makes sure taxes and insurance are current and deals with any modification requests. In the event of a foreclosure, they typically handle that process as well.
The FHA, Fannie Mae and Freddie Mac all have servicing rules. The government wants to insure borrowers are dealt with fairly. When borrowers can’t stay in their homes, chances are good that taxpayers will wind up footing the bill.
Why? Because most residential mortgages are today backed by the government. Overcharging borrowers or failing to respond to modification requests means that borrowers are far more likely to lose their home. That hurts taxpayers and obviously disrupts families.
If a company like Ocwen is violating federal rules and depleting government monies, chances are good that there is a False Claims Act violation. A violation that could pay a million plus dollar award.
If you have inside information about Ocwen wrongdoing, you may be able to receive a large cash award for your information. Many of Ocwen’s misdeeds have come to light but we believe there are many more that the regulators have yet to uncover.
Ocwen CEO Ronal Faris wants the world to believe that his ship is unsinkable. We think it’s time that the company cleans house or gets acquired by a company more carrying for its employees and customers.
Interested in becoming an Ocwen whistleblower? If you have inside information about Ocwen wrongdoing, give us a call. Our financial services (bank and mortgage lender) whistleblower clients have received over $100 million in awards over the last 5 years. You could be next!
For more information, contact* attorney Anthony Dietz at [hidden email]. Unfortunately we cannot help individual forecloure and loan modification victims. If you are a company insider, however, we will call you right back! You can also visit our whistleblower information page.
*All inquiries are protected by the attorney – client privilege and kept strictly confidential. There is never a charge or any obligation for a consultation. If we take your case, we only get paid if we recover money for you.
MahanyLaw – Proudly Representing Ocwen Whistleblowers
Are you a current or former Ocwen customer? We are currently looking for victims of Ocwen loan servicing fraud in many different categories. Please see our current Ocwen Fraud Investigations page to see if you may qualify for relief.
For an update on this story, see They Did What? 12 States Cave to Ocwen.