Ocwen Sued by Multiple State and Federal Agencies

The CFPB complaint makes it easy for lawyers to put together private actions for violations of federal law and with few revisions violations of state law. You have a template here that will go a long way toward establishing credibility to homeowners who are victims of intentional malfeasance by servicers, master servicers, trustees and others. At the very least this data in the lawsuit firmly establishes that there was reckless indifference to the consequences visited upon homeowners and the investors whose money was at risk.

Ocwen pursues the goal of foreclosure at the behest of banks that have no actual interest in the alleged loans. These lawsuits represents actual findings of misbehavior in the “servicing” of purported loans including wrongful foreclosures. It is a pandemic problem not limited to Ocwen. At some point, perhaps now, the question that needs an answer will be answered: Why pursue foreclosure at all costs to the detriment of both the the owner of the debt and the debtor?

The corollary question is why does Ocwen (and others) need to resort to illegal tactics if the loans are real and the paper is authentic?

The only logical answer is that Ocwen was not acting on behalf of “the investor” nor the “borrower” nor in compliance with basic tenets of law. This is a cancer growing on our legal system and our financial system wherein the financial markets have become addicted to a lie, to wit: that the MBS were really mortgage backed securities, that the common law sham REMIC trusts owned loans, and that the sales of nearly all “derivatives” were fraudulent at their base.

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Quotes from CFPB Lawsuit: (see Ocwen)

H. Ocwen has engaged in unlawful foreclosure practices.

177. Ocwen has long touted its ability to service and modify distressed loans, claiming, “helping homeowners is what we do.” In fact, Ocwen has failed to accurately maintain foreclosure-related information necessary to ensure that it provides borrowers with required foreclosure protections. As a result of these and other failures, Ocwen has wrongfully initiated foreclosure proceedings and wrongfully conducted foreclosure sales.

183. In addition, a servicer is prohibited from engaging in unfair, deceptive, and abusive acts and practices, including in the context of foreclosure activity, under the CFPA.

2. Ocwen’s deficient foreclosure policies and procedures violate Regulation X.

200. …Ocwen has inappropriately conducted foreclosure sales on the homes of borrowers who were performing upon agreements for loss mitigation options, such as a loan modification. The borrowers accepted and were performing upon the terms of the options—for example, by making trial payments according to the terms of a loan modification. Even though the borrowers had been doing everything they were supposed to do, Ocwen unilaterally breached the terms of its loss mitigation agreements with borrowers and foreclosed on their loans.

4. Ocwen’s foreclosure failures have caused significant borrower harm.

201. Aside from the obvious harm to any borrower whose home is wrongfully foreclosed upon, Ocwen’s illegal foreclosure practices have also caused significant financial harm, emotional distress, negative credit reporting, and other harm to borrowers.

It committed numerous violations of Federal consumer financial laws that have harmed borrowers. Among other things, Ocwen has improperly calculated loan balances, misapplied borrower payments, failed to correctly process escrow and insurance payments, and failed to properly investigate and make corrections in response to consumer complaints. Ocwen has compounded these failures by illegally foreclosing upon borrowers’ loans and selling loan servicing rights to servicers without fully disclosing or correcting errors in borrowers’ loan files.

The Bureau brings this action against the Defendants under: (1) Sections 1031 and 1036 of the CFPA, 12 U.S.C. §§ 5531, 5536; (2) Sections 807(2)(a), 807(10), and 808 of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e(2)(a), 1692e(10), and 1692f (the “FDCPA”); (3) Sections 6 and 19 of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2605, 2617, and the regulations promulgated thereunder at Regulation X, 12 C.F.R. part 1024 (“Regulation X”); (4) Section 105(a) of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1604(a), and the regulations promulgated thereunder at Regulation Z, 12 C.F.R. part 1026 (“Regulation Z”); and (5) Section 3(b) of the Homeowners Protection Act of 1998, 12 U.S.C. § 4902(b) (the “HPA”).

3. The Bureau brings this action to obtain permanent injunctive relief, restitution, refunds, disgorgement, damages, civil monetary penalties, and other relief for the Defendants’ violations of Federal consumer financial law.

In 2009, Ocwen spun off its internal technology department into a separate company, Altisource Portfolio Solutions (“Altisource”). As a result of this spin-off, Altisource owns and maintains the REALServicing platform. Ocwen has contracted with Altisource for technology services. In 2012 and 2013, while Erbey was the Chairman of the Boards of both Altisource and Ocwen, Ocwen extended this technology- services contract through 2025. {Editor’s note: This essentially contradicts the assertion by Ocwen Robo-witnesses that Ocwen maintains its own records and that the testimony of the robo-witness is sufficient foundation for the “records” to be introduced into evidence and that the “records” were “boarded” after “careful and through auditing.}

A. Ocwen loaded inaccurate and incomplete information into REALServicing and serviced loans using this information.

35. When Ocwen acquires servicing rights for loans, it moves, or “boards,” the records for those loans from the prior servicers’ systems of record onto REALServicing.

Ocwen boarded inaccurate and incomplete loan and payment data from prior servicers into REALServicing.

32. No other mortgage servicer uses REALServicing.

59. …REALServicing requires the use of more than 10,000 comment codes and flags. Yet, Ocwen lacks a complete data dictionary defining its comment codes, flags, and data fields. As a result, Ocwen personnel do not share a common understanding of what these comment codes or flags mean or how Ocwen personnel should use them.

61. …In 2015, an Ocwen consultant concluded that REALServicing had limited workflows and lacked automation. As detailed in the next subsection and Section III, in certain areas, such as payment processing and escrow, this lack of automation has resulted in significant and excessive manual workarounds that have created errors in borrowers’ accounts. {Editor’s Note: This was no accident. It allowed them to manually manipulate data for foreclosures under the cover of being required to do so. In fact neither RealServicing nor Ocwen were ever correcting errors. They were creating them. In other words, this was an intentional act of misrepresentation hiding under multiple layers of entities and practices}

  • With respect to loan modification processes: “[u]pon review of a [loan modification] package, terms are found to be incorrect approximately 80% of the time (e.g., NPV miscalculation, final modification date incorrect)”;

Ocwen’s use of inaccurate and incomplete information to collect mortgage, tax, and insurance payments, communicate with borrowers about loss mitigation issues, proceed with foreclosures, and when selling the servicing rights of borrowers’ loans to new servicers has resulted in significant harm to borrowers.

Ocwen also delayed verifying the 1.7 million Residential Capital loans it previously acquired in 2013, and which it moved from Residential Capital’s servicing platform and boarded onto REALServicing on a rolling basis beginning in early 2014. Ocwen did not even begin the verification process for the Residential Capital loans until September 1, 2014; at that time, Ocwen was servicing more than 1.1 million unverified Residential Capital loans on REALServicing.

In November 2014, Ocwen determined that it was taking, on average, 261 days to complete its verification process for each loan it boarded. In some cases, the verification process has taken more than a year, far beyond Ocwen’s expected 60-day time period.

41. As of 2014, in addition to boarding loans with inaccurate loan information, Ocwen also boarded loans that contained payment history data that it had reason to believe was inaccurate or incomplete. Ocwen, for example, boarded incomplete or incorrect payment histories onto REALServicing, such as payment histories that include misapplied payments and transactions that occurred before the loan was even originated.

As of 2014, Ocwen had also failed to verify whether the prior servicers’ corporate advances or fees for servicing-related expenses—such as attorneys’ fees, property inspection fees, property preservation fees, force-placed insurance charges, and foreclosure-related expenses—were valid and actually owed by borrowers. In many instances, Ocwen has charged borrowers for these charges and fees, even though neither Ocwen nor the prior servicer had invoices or other documents to support these charges and fees, and even though Ocwen was receiving disputes from borrowers claiming that these charges or fees were not owed.

In June 2015, Ocwen also learned that it did not have documentation to support $58 million out of $85 million in corporate advances that it had charged to borrowers whose loans it transferred to new servicers.

47. Even when Ocwen completed its verification process and identified inaccuracies in loan data, in many instances, Ocwen has failed to accurately correct the errors in REALServicing. For example, in November 2014, Ocwen conducted an internal audit and found that its loan verification personnel were not properly correcting or updating the information in REALServicing in 63 percent of loans the audit team reviewed. The audit found that Ocwen personnel had failed to properly correct critical data fields such as loan maturity date, loan term, first payment date, balloon term, and first interest rate cap.

48. In 2015, Ocwen’s outside consultant identified additional deficiencies in Ocwen’s loan boarding process, such as:

  • “High volume of loans error out of the automated process for unknown reasons requiring manual revision”; {Editor’s note: “manual revision is a euphemism in this context. It is actually fabrication of data to reflect what is necessary to foreclose}
  • “Limited available data fields cause various groups to use and reuse same fields for different information”; and
  • “Limited system functionality in place to accommodate SCRA [Servicemembers Civil Relief Act] requirements (e.g., unable to stop fees if fee was in place prior to customer becoming SCRA eligible).”

an internal communication in 2014 with Ocwen’s Chief Executive Officer, Ocwen’s Head of Servicing described Ocwen’s technology as:

An absolute train wreck. I know there’s no shot in hell, but if I could change systems tomorrow I would. I can’t tell you the number of hours I and others spend on basic servicing technology blocking and tackling. I’m not talking about differentiators here. I’m talking about getting system to stay online, escrow analysis to work, letters to print, etc. It’s ridiculous.

By treating the allegations of these agency lawsuits as evidence of administrative findings, it could be argued that there is presumption of wrongdoing. Even without the presumption, the evidence of Ocwen’s track record should be presented to courts to counter the presumptions that are applied in favor of the foreclosing party. Actual proof of actual monetary transactions should be required instead of presumptions attached to pleadings, testimony and documents.
And fundamental to the analysis is that Ocwen is merely doing the bidding of banks that are “underwriters” of MBS and Master Servicers who are diverting money away from investors. In the final analysis, the inescapable conclusion is that the real party in interest is those banks. And when the analysis is complete there is only one logical conclusion: the banks are pursuing a strategy of making their claims for themselves under the guise of an encumbrance in favor of someone else.
Quotes from Ocwen Lawsuit; (see Ocwen)

86. …in January of 2016, Ocwen found that “$8,420,208 in payments were received but not posted to customer’s accounts.” Ocwen concluded: “Management has identified that not applying received payments or loading payments multiple times has become a common occurrence.”

89. …Ocwen has misapplied borrowers’ payments and miscalculated borrowers’ loan balances and amounts due.

90. [Improper data in bankruptcy actions]

  • “There is no connection between the proof of claim as determined in Equator/REALResolution [the system Ocwen uses to process bankruptcy] and the pre-petition arrearage balances in REALServicing.

97. …even though the borrower had sent Ocwen funds in advance to prepay her mortgage, the consumer reports that Ocwen changed her status to delinquent in May 2016, charged her late fees, and made disruptive and embarrassing collection calls to her at her home and work.

B. Ocwen has botched borrowers’ escrow accounts.

100. Ocwen has also failed to perform basic tasks associated with managing borrowers’ escrow accounts. Specifically, due to systems failures, control lapses, and excessive reliance on manual processes, Ocwen has failed to conduct escrow analyses or accurate escrow analyses; failed to timely send borrowers accurate escrow statements; and failed to properly account for and apply borrower escrow shortage payments.

134. Ocwen’s failures have resulted in the lapse of hazard insurance coverage for more than 10,000 borrowers. As of March 2015, more than:

  • 1,500 of these borrowers were able to reinstate their insurance policy, but had to pay a higher premium;
  • 3,000 of these borrowers received letters from Ocwen indicating that it was going to impose force-placed insurance on their loans because they lacked hazard insurance;
  • 500 of these borrowers had force-placed insurance imposed on their loans by Ocwen; and
  • 100 of these borrowers were foreclosed upon by Ocwen.

Ocwen failed to properly recognize individuals as successors, denied loss mitigation assistance to, and, in some instances, ultimately conducted foreclosure sales upon the loans of successors who may have been eligible for a loan modification or other loss mitigation options.

see http://therealfact24.com/ocwen-caught-difficult-situation-misconduct-foreclosure-misrepresentation/

see http://www.courthousenews.com/ocwen-financial-faces-boatloads-complaints/

Quotes from Articles:

Ocwen Financial Corporation is one of the major players in the mortgage world providing commercial and residential mortgage to the people of the US. It also provides Asset Management services to the clients. The U.S. Consumer Financial Protection Bureau had filed a lawsuit against Ocwen Financial Services for misconduct against the borrower’s loan amounts, providing false and inaccurate monthly statements and much more.  Nearly 20 states have filed this lawsuit against Ocwen due to which their share prices fell drastically by 60 percent within an hour of this news. This is not the first time Ocwen has been caught in such situation. They have faced a similar lawsuit in 2013.

At that time Ocwen Mortgage services were fined for $2 billion in compensation to the affected borrowers. Ocwen didn’t pay any attention to the continuous orders from CFPB to rectify their errors and continues with their own practices. Ocwen is accused by all the 20 states including Florida and North Carolina of violating the state as well as federal laws related to the consumer’s protection against loan and mortgages. Ocwen has a different story to tell against the allegation laid by CFPB.

Ocwen … mentioned that the allegations imposed currently are completely different from the 2013 case which would make up to only 1.3 million customers. Ocwen’s … share price declined with a record-breaking downfall to 53.9 percent after the news spread.

CFPB claims that Ocwen is involved in many unethical activities of forcibly foreclosing the homeowners, overcharging the customer for the services not utilized by them, failing to provide payment to the credit borrowers to mention a few. An REALServicing platform system is provided by Altisource to Ocwen from the time when they had a share in it. But later in 2009, it parted their ways but still provide the REALServicing. There has been a case filed against miscalculation of the mortgage amount by the customer even after making payment against the mortgage using the REALServicing system by the company. Since then Altisource is under the supervision and can be held responsible by the CFPB.

Ocwen has been in controversy due to many reasons and the allegations mentioned above are just few of them. William Erbey, an Ocwen founder, who managed Ocwen and Altisource was forced to leave his positions due to fine imposed by the New York’s financial regulator for $150 million.

8 Responses

  1. Bruce — Ross operated under a different administration.

  2. This is really fantastic news … drinks all around!! (then, let’s get to work, asap)

    I especially liked the part about [improper data in bankruptcy actions], and the fact that OCWEN’s proofs of claim (“POC”) cannot be reconciled. (and, therefore, must be disallowed as secured)

    Add to that, that the deed of trust (“DOT”) must also independently reconcile with the purported transfers of the obligation too, in order for that pesky (“POC”) to be allowed as secured..

    Pre-empting with an (“FDCPA”) action based on 15 U.S.C. section 1692f(6), which defines & regulates non-judicial foreclosure related activities as debt-collection, may be prudent now due to recent rulings in the 9th Circuit..

    The case [above] stated a violation of 15 U.S.C. section 1692f, but not 1692f(6) specifically, so I hope that wasn’t a mistake. In my opinion, not being able to argue violation of 1692f(6) would be a [small] injustice.

    I can’t say if Title 15 U.S.C. sections 1641f and 1641g … would’ve been other good “violations” to list, but they define “Assignee Liability,” and, detail the fact that when OCWEN records an assignment in its name (or, anyone else recording an assignment following securitization) violates these sections, unless the “servicer” is or was actually the “owner” of the secured obligation.

    Then, back to bankruptcy and disallowing the alleged creditors pesky (“POC”). Sounds like a plan to me..

  3. The justice system of New Jersey has been giving Ocwen foreclosures and turning a blind eye to all the fraud they are committing in their court rooms. They allow indorsements on notes for summary judgment 7 years after the fact. They allow fraudulent assignments of mortgage despite evidence of robo signing. They obviously don’t rule on the law. They don’t care that there is no power of attorney from the alleged trustee. They rely on affidavit of their employees whose affidavit says a different trust owns the note. What benefits do you suppose these judges receive for their compliances with the banks. Did they sell their souls to the devil for the comforts of this life. They will rot in hell with the bankers the servicers their lawyers and the employees that work for them. Give to Caesar what is Caesars. It’s the beast system that we are witnessing. I’ll keep my trust in God. What’s unseen will be seen.

  4. Reblogged this on Mario Kenny.

  5. To Bruce Nelson-
    As a disabled veteran, it sickens me to the pit of my stomach that you had to have this done to you.
    It has been stated by an
    Anonymous FBI former employee that when the FBI does background checks on candidates for judge and other offices, they approve candidates who are child molesters and rapists. That way, they can blackmail that person into doing what they are told.

  6. We had Ocwen back in 2000-2003,
    They commenced foreclosure, we paid up, but they never removed the attorney fees (5%) of loan balance from
    Our mortgage amount. After 2 years of letters and phone calls we gave up.
    While the law firm was entitled to some
    Payment for filing the foreclosure and paying a couple bucks for
    Some outfit to look up the courthouse records, there was no foreclosure once we cured the “default” .
    They were pretty disgusting, amd are worse now.

  7. This could turn into a major can of worms, but I doubt it. The process of turning mortgage notes into securities has made the notes worthless in terms of using the courts to collect on them.This is a known fact. I believe we are looking at a foreclosure process that can only be legal if documents are fabricated. The people in the know on all of this are hoping that homeowners will keep doing the “right thing” by paying on the loans. Quit title action could be the crack in the dam that destroys all the value of the mortgage bonds held by investors. I believe that is the reason so few have been successful so far. Ocwens is already blowing the whistle on all the other servicers for doing the same fabricating. So far nobody has faced criminal charges but if that day comes, watch the whole house of cards come down. All it would take is for a corporate big wheel or one of the attorneys for the servicers to get arrested for mail fraud. Remember the movie “The Firm” Using the US mail to commit any type of fraud in order to collect money that you have zero rights too, is still a crime. All that is needed is a postal inspectors who takes his job seriously and a district attorney who doesn’t fear wall street.

  8. Mr Garfield, I am aware my previous replys may have come off as whinning. I expect nothing. But I woul like to “point” you in the direction of our new Secretary of Commerce, Wilbur Ross. Not much is said about his catostrophic role in the unlawful ripping off of millions of homes, perhaps a billion dollars or more with his flagrant stealing of “servicing” funds under his former American Home Mortgage Servicing Inc. a compny founded on the bones of American Home Mortgage. He baied his criminal counterpart by buying the ashes of AHM and gave birth to AHMSI. Never once did Ross produce ANY evidence of legal standing yet was able to instruch a Mr. Friedman (CEO AHMSI) to stonewall me by pretendiing AHMSI had standing. AHMSI in the only court I could pro se was brought to its knees when Teresa Shill, AHMSI attorney failed to produce standing (note, mortgage, etc) in 12th Dist Circut Ct, Dallas OR Polk Count late December 2009. Judge Horner warard 580 Riverview to me lock stock and barrel. But that did not stop our Secretary of Commerce to be from haunting me and having formed a partnership with OCWEN an HSBC for connning a Federal Ct Judge in Portland, OR from dismissing me (pro se) and giving my $340k equity to my adversarys, AHMSI (Wilbur Ross, OCWEN (Bill Enby CEO and who the hell evver HSBC got a chunk.

    I fought this battle via CFPB who turned me over to the criminals who now “owned my $34K. A ray of hope to be burned out by absolute criminal treatmen. I will never see a dime of my retirment funds now at 78 disabled vet. The IRONY, is look who is my new watchdog….Wilgur Ross. Ocwens former partner and collaberator who parttnered with his partner in crime, Bill Enby who has escaped to Malta to avoid SEC and FTC prosecution.

    Just saying thats all, just saying….who is going to take Ross down, know anyone

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