Lending Servicing

Florida also alleges widespread servicing failures at Ocwen

Attorney General Pam Bondi files lawsuit against nonbank

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The Consumer Financial Protection Bureau and the members of the Multi-State Mortgage Committee were not the only ones to take action against Ocwen Financial on Thursday for the nonbank’s mortgage servicing practices.

The state of Florida also sued Ocwen, which is based in West Palm Beach, along with the company’s subsidiaries Ocwen Loan Servicing and Ocwen Mortgage Servicing, for “mortgage servicing misconduct.”

According to the complaint filed by Florida Attorney General Pam Bondi and Florida Office of Financial Regulation Commissioner Drew Breakspear, Ocwen “harmed Floridians by filing illegal foreclosures, mishandling loan modifications, misapplying mortgage payments, failing to pay insurance premiums from escrow and collecting excessive fees.”

Florida’s complaint, filed in federal court in West Palm Beach, alleges violations of the Real Estate Settlement Procedures Act, the Florida Deceptive and Unfair Trade Practices Act and Chapter 494, Florida Statutes.

The complaint claims that Ocwen “failed to adequately perform basic mortgage servicing functions that resulted in widespread errors and financial harm to borrowers.”

In a release, Bondi’s office claims that despite a 2014 settlement between Ocwen, the CFPB, and 49 states that involved Ocwen providing $2 billion in consumer relief and paying a fine of $127.3 million for many of the same issues, Ocwen continued to fail in its duties as a mortgage servicer.

“Attorney General Bondi’s Office has since continued to receive complaints regarding Ocwen’s mortgage servicing failures,” Bondi’s office said in its announcement. “Despite the national settlement and numerous other lawsuits and regulatory actions brought against Ocwen throughout the nation, Ocwen allegedly violated consumer protection laws through its use of a fundamentally flawed and unreliable system of record, operational deficiencies and inadequate controls to ensure compliance and prevent errors.”

According to Florida’s complaint, Ocwen’s issues are pervasive and systemic throughout the company’s operations.

“The deficiencies in the Ocwen Defendants’ system of record are widespread and often require manual fixes and result in significant errors such as illegal foreclosures, mishandling loan modifications, misapplied mortgage payments, failure to make insurance payments from borrowers’ escrow accounts, and overcharging borrowers’ accounts for default fees,” Florida’s complaint states. “The Ocwen Defendants willfully disregarded advice from regulators and retained third party auditing firms to update its technology.”

Florida’s complaint also alleges that Ocwen did not adequately respond to customer complaints and requests for loss mitigation.

“The Ocwen Defendants have also engaged unlicensed vendors to assist in servicing functions and failed to implement adequate control over vendors,” Florida’s complaint states. “The Ocwen Defendants knew or should have known that their servicing errors were widespread and that the technology used in their systems and by their vendors was compromised and functioning below industry standard.”

According to Bondi’s office, the complaint seeks financial and other relief for harmed borrowers and an order preventing Ocwen from servicing loans in violation of Florida and federal law. 

“It is my office’s duty to protect the more than 125,000 Ocwen borrowers in Florida. Since 2014, when we first entered the multistate settlement with Ocwen, we have listened to Ocwen’s promises that they would ‘right the ship’ and resolve the improper mortgage servicing and foreclosure misconduct that has plagued it,” Bondi said in a statement. “Enough is enough. Florida’s distressed Ocwen borrowers should no longer have to endure costly servicing errors and unfair practices.”

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