Sick Puppy Ocwen to acquire Sick Puppy PHH Corporation: Homeowners Beware

Shares of struggling mortgage servicer Ocwen jumped after the company announced it would buy rival, PHH Corporation- another small loan servicer that is able to operate without the servicing limitations imposed on big banks .

In a release, Ocwen said the agreement was for $360 million in cash or $11 per diluted common share. PHH Corp. shares surged 26% to $10.76. Ocwen rose nearly 9% but is still down over 17% over the last 12 months as they combat a plethora of lawsuits brought by disgruntled homeowners.

Ocwen expects the transaction will offer “improved economies of scale,” reduce fixed costs, and provide what it calls “a superior foundation to eventually enable the combined servicing platform to resume new business and growth activities to offset portfolio runoff.”

Recently, the California Department of Business Oversight (DBO) announced that it had joined a $40 million multi-state settlement against PHH Mortgage Corporation (“PHH”), stemming from allegations that PHH had violated federal and state laws regarding foreclosures, loan modifications and servicing. California is among 47 states participating in the settlement against PHH.

According to a press release issued by the DBO, examinations jointly conducted by the 47 participating states found that PHH “failed to exercise proper control over foreclosure documents, allowing unauthorized executions, inconsistent signatures, and improper certification and notarization, all of which affected the integrity of documents relied on in the foreclosure process. In addition, the examinations found deficiencies in other internal controls, loan servicing and modifications.”

According to the DBO, at least 3,800 California borrowers are eligible to receive refund checks under the terms of the settlement. These include California borrowers who were wrongfully foreclosed on between January 2009 and December 2012. An administrator will contact impacted borrowers, who must then submit claims back to the administrator.

This merger of two sick companies should be protested.  Both companies have struggled with regulators who’ve accused them of improper (read illegal) treatment of borrowers, including taking steps as drastic as foreclosing on homeowners inappropriately with forged and fabricated documents.

PHH retaliated and brought a lawsuit challenging the structure of the Consumer Financial Protection Bureau, the agency established after the financial crisis to shield Americans from wrongdoing by the financial services industry.  An appeals court rejected that argument late in January but did invalidate fines levied by the CFPB against PHH.

Mortgage servicing, which involves receiving payments from homeowners and then funneling them onward to lenders and municipal authorities, is a low-margin business, that many of the large banks are moving out of because they must follow stricter rules than non-bank servicers.   Many servicers are still struggling with the fallout from the housing crisis and old, legacy equipment has interfered with the boarding process when a loan is transferred from one servicer to another.  Ocwen’s solution has been to create the missing documents out of thin air.

Ocwen customers have claimed for years that they confront a daily battle of unanswered phone calls, conflicting information, unprocessed loan modifications and illegal foreclosures- that make it impossible to bring their loans current.

Ocwen’s REALServicing platform is hopelessly outdated and not equipped to deal with hundreds of thousands of loans-let alone a merger with PHH that suffers from the same deficiencies.

If you ever called Ocwen’s customer servicer number and got the feeling that the “right hand doesn’t know what the left is doing,” you are right. Employees tell us that they are understaffed and that they have no systems in place to know what other customer service reps have done on a file or what advice may have been given previously to a caller.

One former employee has stated on the record that documents requested from homeowners are routinely shredded because no one is available to review them.

In late April of 2017 twenty states took aim at Ocwen and blocked the company from handling any more mortgages in their states. Massachusetts became the 21st state on April 30th and in May, Texas joined the growing list of states that have said, “Enough!” to Ocwen’s foreclosure fraud.

Ocwen should be subjected to a national class action complaint against the company based on these findings:

  1. Use of a proprietary software known to trigger unsupported fees and speed foreclosures (REAL Servicing);
  2. Knowing use of infirm loan data,
  3. Illegal foreclosures,
  4. Failure to credit borrowers’ payments,
  5. Mismanagement of escrow accounts,
  6. Manufactured force-placed insurance,
  7. Delayed termination of private mortgage insurance,
  8. Charges for additional products without consent,
  9. Mishandling accounts for deceased borrowers, and
  10. Failure to correct errors identified by the borrower.

Ocwen is now the largest residential mortgage servicer in the United States. It services hundreds of billions of dollars of home loans. Customers have no choice in who services their loan- and when Ocwen or PHH purchases the servicing rights to your loan you should be terrified of their practice of ensuring that a default occurs.  Ocwen and PHH won’t get wealthy from servicing loans and tiny profit margins, but they will become wealthy forcing loans into default and the subsequent financial windfall.

Ocwen and PHH’s business model is based on increasing late payment fees, force placed insurance, property maintenance, title searches and the like. In the words of one expert, “Because servicers are permitted to retain ancillary fees, they have an incentive to charge borrowers as much in fees as they can, even if the fees are not provided for by the mortgage loan documents or a direct contract.”

Ocwen, as servicer, makes money by maximizing fees earned and minimizing expenses while performing the actions spelled out in its contract with the investor. .  . The broad grant of delegated authority that servicers enjoy under pooling and servicing agreements (PSAs), combined with an effective lack of choice on the part of consumers, creates an environment ripe for abuse.   Lendinglies has had clients refinance to remove their loan servicing from Ocwen, just to have it sold right back to Ocwen.

Ocwen should not be acquiring additional business until it can effectively fix the rackeetering operation it is running.

We thought that Ocwen had finally met its demise in 2015. That year investors sold off their stock in the company causing the company’s value to plummet. Over one hundred trusts holding $82 billion of mortgages gave Ocwen the boot. Their reasons?

  • Using trust funds to pay off Ocwen’s obligations owed under a regulatory settlement. Instead of paying what they owe, the trusts say that Ocwen pushed the payments onto them;
  • Gross conflicts of interests. Ocwen used corporate affiliates such as Altisource and Home Loan Servicing Corporation to further enrich itself and hurt borrowers and the trusts;
  • Failing to comply with foreclosure and consumer protection laws;
  • Engaging in illegal and improper loan modification and advance recovery practices;
  • Improper records practices;
  • Failing to properly communicate with borrowers; and
  • Failing to properly pay the trusts.

In other words, it isn’t just homeowners who claimed they were the victims of Ocwen fraud. It is the investors who own the loans too and the fun hasn’t even started yet.

Ocwen seemingly rose from the ashes and crashed again in 2017, yet its behavior and the way it has treated homeowners has not improved.  Ocwen is operating as a RICO entity (Racketeer Influenced and Corrupt Organizations Act) and charges should be brought against the company.

Ocwen relies on home owners being disorganized like they are. If you are a homeowner with a loan with Ocwen please keep all of your return receipts, a phone log of your calls to Ocwen or a diary of your dealings with the company.  You may need these in the future.

 

 

 

6 Responses

  1. Anyone know who or what “Bluewater Financial Holdings, Lc” is (relation to PHH)?

  2. There are a lot of foreclosures happening lately and no one is volunteering as Pro Bono attorneys in Rhode Island. This is a sad situation.

  3. […] via Sick Puppy Ocwen to acquire Sick Puppy PHH Corporation: Homeowners Beware — Livinglies’s Web… […]

  4. The problem is there is no oversight. No follow through. It all just fancy talk. Millions have lost their homes and Ocwen is making a fortune. They don’t care about stock price. They are making huge money from the sale of the foreclosed property and the pmi insurance pay out and then they get a tax credit to boot. The judges has made it so easy for them to foreclose it’s ridiculous. The problem that everyone doesn’t realize is that anyone paying their mortgage will eventually end up in their trap. They will eventually push people to foreclosure. They keep in increasing people’s mortgage payments with no explanation when they know they will eventually break a homeowner and the courts will keep giving them the houses because their bias is you didn’t pay your mortgage. That’s how easy it is in New Jersey. They allow fraud here in their court with no problem at all. Even when the note is payable to a different lender with no endorsement. They will even allow the bank/ servicer lawyers to testify and give hearsay evidence. Been through it all right up to the Supreme Court.

  5. I’d appreciate it if anyone can locate the purchase and assumption agreement between OCWEN and AHMSI …

  6. Thank you for shedding light on these financial parasites. It helps the Millennials to see how messed up the mortgage industry really is and how to avoid it.
    When house prices drop down to real market levels, these servicers will starve.

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