Liberty Parent Ocwen and CFPB Fail to Settle Mediation on 2017 Suit

Liberty Reverse Mortgage and PHH Mortgage Corp parent company Ocwen Financial Corporation announced today that it has concluded its court-ordered mediation process with the Consumer Financial Protection Bureau (CFPB), a process which has failed to produce a settlement.

“We are disappointed that settlement discussions with the CFPB did not resolve this matter, in particular since we have resolved all state regulatory actions filed against Ocwen in April 2017, most recently through a settlement reached with the State of Florida in October 2020,” the company said in a statement. “We engaged with the Bureau in good faith throughout the course of mediation and numerous related discussions and took all actions in an attempt to reach a fair and reasonable resolution.”

Ocwen maintains its stated belief that claims made by CFPB regarding Ocwen’s prior servicing practices are “unsubstantiated,” adding that the CFPB settlement demands “do not reflect the merits of this case.”

The company remains committed to resolving this dispute before it reaches trial, and a pending motion for a summary judgment filed this past summer has yet to be decided.

The issue stems from a complaint filed by the CFPB against Ocwen in April 2017, which alleges a host of violations on the part of Ocwen, including illegally foreclosing on 1,000 borrowers, mishandling escrow accounts, enrolling consumers in add-on programs without their consent, and knowingly populating its mortgage-tracking software with incorrect or incomplete information.

In late 2019, Ocwen’s prior dismissal motion for the case was itself partially dismissed by Florida Southern District Court Judge Kenneth Marra, but the dismissal was without prejudice allowing the Bureau to refile. 

Ocwen has been facing a number of financial difficulties in recent years, though a continuous bright spot for it in terms of business performance has been Liberty Reverse Mortgage. Recently, Ocwen lauded the strong performance of Liberty as a source of profitability in an earnings call late last year.

“About the reverse mortgage opportunity: we do expect the maturing baby boomer generation will create potential growth opportunities for our very profitable reverse mortgage business,” said Ocwen CEO Glen Messina in October. “The National Reverse Mortgage Lenders Association (NRMLA) reports that seniors have $7.7 trillion of untapped home equity to support their retirement needs, and unfortunately many of these seniors do not have sufficient savings in cash flow for their retirement.”

According to the most recent Home Equity Conversion Mortgage (HECM) endorsement data from December 2020, Liberty is the fourth largest reverse mortgage lender in the nation, recording 3,588 HECM endorsements in calendar year 2020 according to data compiled by Reverse Market Insight (RMI).

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