The New York Department of Financial Services and the Consumer Financial Protection Bureau are investigating Ocwen Financial Group (OCN) over whether it improperly stalled short sales by borrowers who owe more than their homes are worth. Per Bloomberg:
According to the article, Ocwen is being is not following a new rule that requires mortgage servicers to approve or deny a short sale within 30 days of an application and is instead delaying such sales to collect more fees.
In short sales, the lender gets the proceeds of the sale and relinquishes the balance of the mortgage. Borrowers get out from under a loan they can’t repay, and housing inventory is freed up. Consultants specializing in the practice in states suffering the most in the mortgage crisis say Ocwen is known for demanding more paperwork before the deadline, forcing the process to restart.
“Ocwen has it all figured out,” Deborah Priebe, a senior vice president at Short Sale Success in Henderson, Nevada, said in an interview. “They are notorious for asking for one more piece of paper on the 29th day.”
On Tuesday, Ocwen was also put under the spotlight by the National Mortgage Settlement, which is saying that it doesn’t trust Ocwen’s own internal reviewers and the documents they provide.
