The Beginning or the End for Loan Servicer Ocwen?

By William Hudson
Ocwen Financial, one of the largest subprime mortgage servicers in America, has big problems. Analysts predict that Ocwen will be forced to file bankruptcy as the SEC opens up two more investigations into the loan servicers business practices while the stock goes into free-fall.

A further hurdle will befall homeowners if Ocwen files for bankruptcy protection because another shield is placed between the homeowners and the banks who are the culprits- but just happen to control all of the “loan” information. As Neil Garfield would say, “They have plenty of bodies to throw under the bus.” To date, homeowners and their attorneys in litigation have been frustrated by attempts to discover who the true creditor is especially when the servicer hides behind bankruptcy, mergers and receivership (Fannie and Freddie).

Ocwen reported a $247 million annual loss while revenues tumbled 17.5% last week at the same time the SEC is continuing to scrutinize their shoddy and abusive servicing practices. Despite the fact that Ocwen previously settled with multiple government regulators upon findings of fraudulent servicing practices, apparently it is business as usual for Ocwen as authorities continue to investigate their business practices- without administering any penalty with teeth or consequences.

Only a month ago, Ocwen settled with the SEC for misstating their 2013 and 2014 financial results and were fined a paltry $2 million dollar fine for poor internal controls and failing to disclose the financial conflicts of their former CEO Bill Erby. In 2014 alone, Ocwen would pay a $100 million civil monetary penalty to the New York Department of Financial Services for violations and non-compliance with a prior consent order with a regulator. Last year they paid an additional $2.5 million fine to the California Department of Business Oversight on their servicing practices that ultimately led to Ocwen being barred from acquiring new Mortgage Servicing Rights in the state of California. Predictably, although the Department of Business Oversight had threatened to revoke their mortgage license- and should have- they failed to do so.

On the upside for Ocwen, is that they will remain in the business of servicing Ginnie Mae loans and will also continue to originate and service new Fannie and Freddie loans. My advice would be to steer clear of GSE loans like Fannie Mae and Freddie Mac if at all possible since it presents one more ‘layer’ to navigate if at a future time you suspect fraud may have been involved in your loan. Both Fannie Mae and Freddie Mac are quasi-governmental institutions that are immune to Freedom of Information Requests and federal transparency, while still benefiting from being private corporations. The GSE’s have a cushy little deal where they appear to exist outside of both governmental and corporate regulations.

Last year Ocwen demonstrated that they couldn’t effectively service government guaranteed loans, and was forced to sell $45 billion in mortgage servicing rights (MSRs) on loans originated by Fannie Mae to JPMorgan Chase. Ocwen was also forced to sell a total of $34.8 billion in MSR’s on Fannie Mae and Freddie Mac loans to competitor Nationstar Mortgage in two separate deals to unwind servicing legacy agency loans. Although I could go on and on about the abusive servicing practices that have resulted in Ocwen being financially fined and forced to sell its servicing rights, let’s just say these issues are indicative of the regulatory and investor pressures the servicing giants are now facing- across the board. At present, bondholders have requested that Ocwen be removed from servicing 119 different residential mortgage backed securities trusts with more requesting removal weekly.

Last Monday Ocwen was notified that the SEC would launch a new SEC probe into its servicing operations. The SEC is investigating Ocwen’s use of collection agents by the company’s various mortgage loan servicers, a practice that Ocwen has argued is a standard practice across the servicing industry. President Ronald Faris commented that their practices and fees are considered standard and should be of no concern. Faris is correct in that Ocwen’s illegal practices of using forged and fraudulent documents presented to courts across the country in order to foreclose is standard practice among loan servicing agents. However, Faris is delusional if he believes these practices should be of no concern. To whom? The shareholder who has no idea the loans Ocwen services are owned by phantom entities with no standing to foreclose, or the homeowner who is subjected to predatory servicing and foreclosure tactics? If the government agencies would do their jobs- Ocwen would cease to exist tomorrow.

The SEC has opened an investigation into the fees and expenses the company charges in connection with its management of liquidating mortgage loans and real estate properties in different RMBS trusts. Unfortunately, Ocwen is not being investigating for violations against consumers, but only because investors have complained and when investors complain the regulators and government take notice. Groups of investors have a tendency to get better results when they go up against a large corporation and can retain the best representation that money can buy. A homeowner in a small town outside Des Moines with an attorney specializing in family law doesn’t pose much of a threat or incite the same action.

It is unusual for the SEC to investigate business practices. Typically the SEC will only investigate the integrity of financial statements. CEO Ronald Faris spoke on a conference call Monday evening and addressed the investigation. He said what all good CEO’s say to distance themselves from controversy, “I can’t really comment except to say that we feel confident that the fees that are part of the servicing business that are either assessed to borrowers or passed on to RMBS investors are – they’re monitored closely by master servicers and trustees and others. We’ve had various third parties look at them. We have a good sense as to what other servicers have done since we’ve acquired a lot of servicing portfolios and been able to see what industry practice has been. And we feel comfortable that our process is within industry practice. So, we can’t comment on what exactly a regulator may be looking for, but we do believe that our processes are appropriate.” Faris confirms that he is simply going along with industry “best practices”. Best practices that have been revealed to include falsifying affidavits and forging mortgage documents in order to create the illusion of having standing to foreclose.

In January, Ocwen announced that Phyillis R. Caldwell joined the Board of Directors. Caldwell previously served as Chief of the Homeownership Preservation Office at the U.S. Department of the Treasury where she was responsible for oversight of the U.S. housing market stabilization, economic recovery, and foreclosure prevention initiatives established through the Troubled Asset Relief Program (TARP). Since Caldwell did such an outstanding job with TARP what could go wrong? Under TARP millions of TPP modification agreements were extended and revoked for no reason while the homeowner was in compliance with the terms of the agreement.

Upon announcing Ocwen’s director, the company issued a press release stating, “Phyllis’ character, deep experience in the housing and mortgage markets, and commitment to borrowers and communities makes her the right choice to move Ocwen forward and emerge as a stronger company with the highest standards in our industry.” Unfortunately, we know what commitment to borrowers and communities’ means for homeowners under Ocwen. It means that investors will be able to come in, purchase properties for pennies on the dollar and displace families while Ocwen alters legal instruments to give the illusion of standing and forecloses on properties. Becoming a stronger company refers to cashing in a few favors she has coming her way so Ocwen can escape extinction. Caldwell’s appointment is disturbing and it is obvious what type of ‘help’ she will provide to Ocwen (cronyism and assistance covering their fraud scheme).

Remember, Ocwen was issued a consent order from the CFPB in every state but Oklahoma last year that illustrated the “continued, systemic abuse of the American homeowner.” Ocwen was accused of “violating consumer financial laws at every stage of the mortgage servicing process,” according to CFPB Director Richard Cordray. However, under that settlement, Ocwen executives faced no criminal charges, did not pay the majority of penalties themselves, and were not forced to admit wrongdoing in the case.
Ocwen, like JPMorgan Chase, Citicorp, Bank of America and other bank servicers settled cases of mortgage servicing abuse in the National Morgan Settlement back in 2012 for 25 billion dollars. The banks paid a nominal fine, and transferred or sold their servicing operations to non-bank servicers like Ocwen.

As a non-bank servicer, Ocwen doesn’t own any of the loans. They merely service loans, collecting monthly payments and dealing with loan modifications and foreclosures, for investors who purchased them as part of mortgage-backed securities.  Ocwen makes the erroneous assumption that the loans they are servicing actually made it into the trusts they claim to. Ocwen has no way to verify if the note is where it is supposed to be but makes false assertions that it is simply because the bank “says so”.
Although Ocwen is not a bank, they have engaged in the exact same servicing practices as the big banks. Eric Mains who is suing CitiMortgage likes to call this game of passing around servicing rights while also claiming creditor rights, “Whack-a-Mole.” The entire servicing industry, by design, is about keeping the homeowner in the dark until they can properly execute the foreclosure action. Servicers change, account numbers change, customer service representatives provide account disinformation and banks routinely fail to comply with any statute meant to protect the homeowner from this type of exploitation and predation.

“Too often trouble began as soon as a loan transferred to Ocwen,” said CFPB Director Cordray when he announced the enforcement action last year. Ocwen was accused of charging borrowers more than stipulated in the mortgage contract; forcing homeowners to buy unnecessary insurance policies; charging borrowers unauthorized fees; providing inaccurate information to borrowers when questioned about excessive and unauthorized fees; lying about loan modification options; misplacing documents and ignoring or losing loan modification applications, deliberately causing homeowners to slip into foreclosure; illegally denying eligible borrowers loan modifications, and then lying to cover up their crimes. These activities result in foreclosures and a windfall of profits to the loan servicer who will then reap a free house, insurance proceeds and other undisclosed rewards granted for successfully foreclosing on a home. I wouldn’t be surprised if Ocwen had a Pirate of the Week award that includes a parking spot upfront near the CEO.

Finally, if Ocwen goes into bankruptcy, homeowners who have loans serviced by Ocwen will face further hardships attempting to unravel who their creditor is, if the loan was legitimately transferred, while being subjected to some unsavory servicing practices that appear to be designed to ensure the appearance of homeowner non-compliance. It is time that Ocwen ADMIT wrongdoing so that their executives will not be protected from legal consequences. Ocwen also needs to be forced to pay any penalties with their own money, not the investors. To date, Ocwen has only faced trivial administrative fines while foreclosing on thousands of homeowners under false pretenses, with fraudulent documents, by predatory means. Until the government regulators take real action- this is business as usual for the loan servicers.



21 Responses

  1. My home is up for foreclosure next month for about the 5th time. Ocwen has sent out letters or statements with different dates to start the payments on a modification or a totally different modification amount. This of course means that if I go by what I get in the mail from them, they always come back with a way to stop the modification process. Then I must go through doing the paperwork all over again. I have the contridictional information that I receive. Three or maybe four times Ocwen has rejected the modification even though I’m making the payments that were set up for me. Also the payments have increased instead of decreased with a balloon payment at the end that also has increased due to Ocwens, consistent errors or should I say strategically placed errors. Even if I send payment in on my own they send them back. This company is the most unethically run company I’ve ever seen. With the exception of the government, this I know first hand I worked for the IRS over 34 years until I was forced to retire due to decrimination, hostile work environment, over use of power and unethical behavior. My small pension has been levied since I retired. I sent in a letter protesting this and asking for proof that I owe. All I got was a letter with one line pay your debt. Sorry I got off on another topic but I have been physically sick for 3 year due to Ocwen and the government treating me like I had know purpose to he here on earth. I filed an EEOC with the IRS however they are not there to protect our rights the EEOC only protects the rights of the powerful. There should be checks and balances in every business. Never will happen. Instead of enjoying my retirement, I must figure out what I must do without my medication or food. I have documents for everything I have said. An Ocwen representative told me if I didn’t have my application in by last Monday it might not be processed. I know I have 7 days prior to the foreclosure to get it in. Their mistakes don’t reflect on them it only means I must pay more. Also the way I was treated at work which was deplorable, doesn’t matter because none of the personal who broke several laws will ever be accountable. My life is a mess due to the government and Ocwen, before it was Ocwen it was Indymac who told me a bunch of lies. I wish I could go to Ocwen and Department of Treasury and clean house.

  2. They purchased my loan and I immediately started having problems. Almost lost my house. I was finally able to refi, with another bank and am grateful te be rid of Ocwen. They send monthly memos with the mortgage statements if you don’t opt out, the next thing you know you have some odd charge showing up on your bill. Horrible company with horrible employees. Have they all sold their souls to the highest bidder? How do these people sleep at night?

  3. Many people have stated they would never get a loan from a bank that used Ocwen Financial ,Washington Mutual Bank sold my loan package to Ocwen a year after the loan was originated. Ocwen has refused to tell me what bank currently holds my loan.

  4. I have ocwen after indymac mac one west bank. I have fraud from the start of orgination. Mr bill paatalo did an audit with an expert affidavit. Fraud fraud fraud they also are claiming i owe 360,000 when my 1098 for the year states 207,000. Bottom line we live in a world of predatory lenders , servicers, and alot of attorneys are also predatory. We home owners are like krill in the ocean just sittting and waiting to get scooped up and devoured that is the facts about it. The c.f.p.b is just another bisiness that takes claims fines certain services lenders and also pocketts highe amounts of money while homeowners lose. I just dont know why people jist dont care. People have to remember one day we all will be judged by our LORD all mighty GOD then i guess we will truly see true facts. People like government are protecting big banks this is wrong!!!! Ron 559 967 2298.

  5. Why in the world would Ocwen start charging for payoff quotes? It is wrong, just another fee to charge. From here on out I will be asking a Bank if they use Ocwen and if they do I will not bank with them.

  6. Ocwen Loan Servicing used failing Homeward Residential to phony up a pretender beneficiary Deutsche Bank lawsuit to rescind my primary residence Full Reconveyance. Ocwen used robo-lawyer, using forged fabricated documents and robo-witnesses to bribe a bias Judge from China who stripped me of all my rights granting Judgement Reconveyance void, probably because he himself has a pension investment with fraud bank. Ocwen is now using multiple fraudulent foreclosure and fraudulent Altisouce trustee threats to coerce me into outrageous loan modifications to avoid fraudulent trustee sales, demanding I pay Ocwen over $200,000.00 more then the Option One Mortgage loan that was paid off over 10 years ago, and if I don’t bend over and obey Ocwen will instruct its cozy buddy Altisource to proceed with the fraudulent trustee sale and I will lose my home I own free and clear. CFPB is a corrupt operation only out to collect fines to fund leftist groups and victims continue to suffer. It is a complete waist of time filing reports with the CFPB, trust me. Ocwen sum litigation lawyers are incompetent dalusional and sick, only out for themselves keeping the Ocwen payroll circulation going. God will judge them.

  7. Strong armed me into bad modiftacion. Wells fargo hanging sale notices on my door then get mod. That rapes me of all payments history and owe more then i bought for pulse 10% of any inpovements i make help themsevles not home owners crooks from india???

  8. I too have been subject to numerous lies and lost paperwork by Ocwen. Between Ocwen failing to modify my loan in a timely manner (or at all) 18 months after forced into active duty military hardship, I have paid over $150K on a house only to have $9K off the principal.

  9. We are trying to refi with another lender. We have had a modification loan with Ocwen for 4 years. The company is refusing to send the new lender a pay off amount without seeing an appraisal on our home! Is that legal?

  10. 2 yrs ago i was told by an ocwen rep i was behind send no more payments i sent two payments indicating they were two and they applied it to one 1 and the rest to principle after two doubles i was notified forclosure proceedings were started in mediation i agreed to pay 8255 dollars by wiring them the money i called two times prior to wiring the money asking if that is all that is due and was told yes two weeks later i recieved a bill for 1900 for more charges added no one could tell me what the charges were for and now even though my payment is current they are now talking forclosure again crooks plain and simple i need help

  11. we lost our house to ocwen by way of sheriff sale on july 2015 after 8 years of ownership and two years trying to get a refinance/modification after endless attempts with no results our house was sold at sheriff sale and we were forced in to bankruptcy they are clearly at fault of predatory lending and illegal foreclosures and the average citizen has no way to fight back what is wrong with this country why is there no justice for the people that helped make this country what it is today right is right and wrong is wrong and the government does nothing

  12. Please get back if u can . we had indymac onewest bank they sold to ocwen. 12 years of payment 2 mods now i owe 40 000 more and paid for 12 years. They are fraud all the way i also have a mers loan nothing is backed up. I hird a law center 5 months ago at the RELC pc they have done nothing. Please help we have been took for a ride . Ron and sadie osburn. 559 802 5119.

  13. Ocwen has done major fraud with my home since indymac bank sold it to them. They cannot prove they own home also i bought home in 2005 for 334,000 12 years later i owe 364,000. These banks steal everything from us. Ron osburn 559 967 2298

  14. Please direct me ,I constantly receive mail from Ocwen with the fear of foreclosure ,even though I only owe 1/2 of my monthly payment.. I pay every 2 weeks … Stresses me out severely. I’m always thinking I did something wrong like there;s a print so small that i hadn’t seen it .
    I’m stuck with them ..I can’t refinance….


  16. Reblogged this on Deadly Clear and commented:
    Are we ready to invent the new Monopoly game? Can’t you just picture it? Instead of Boardwalk and Park Place we get Chase and BofA; Connecticut, Vermont and Oriental Avenues become AHMSI, Homeward Residential and Ocwen. There’d be a lot more get out of jail free cards and Community Chest would become Office of Controller of Currency and Chance would be Federal Reserve. Yeah, I can envision the entire game – how many times can we bankrupt them?!

  17. I just want to repost this again simply to make sure as many people see it as possible…

    I have received a flagrantly fraudulent 1099-c (cancellation of debt) from OCWEN where they are taking 100% of the negotiated debt cancellation in 2015 rather than waiting for it to be realized in 2016/17&18 as clearly outlined in my HAMP mod docs . In my case the fraud gained for them (or a company that might buy their assets which would include tax credits) is worth about $50,000 in tax savings for a profitable company. The IRS and the SEC have received packets from me and are investigating as it is likely that the same fraudulent practices are being applied to all HAMP mods processed by this debt collector.

  18. Reblogged this on California Freelance Paralegal and commented:
    Interesting blog post by Neil Garfield where he discusses how analysts are predicting that Ocwen Financial, one of the largest subprime mortgage servicers in the United States may soon have to file for bankruptcy.

  19. Excellent article!

  20. Reblogged this on AXJ USA NEWS.

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