Mortgage firm Ocwen accused of abuses
One of the nation’s largest servicers of home loans may have denied struggling borrowers the chance to fix loan problems and avoid foreclosures, New York’s financial regulator has alleged.
An investigation by the state’s Department of Financial Services found that Ocwen Financial Corp. inappropriately backdated foreclosure warnings and letters that rejected mortgage loan modifications, making it nearly impossible for borrowers to appeal the company’s decision.
Many borrowers who had fallen behind on loan payments also received warning letters months after the deadline for avoiding foreclosure had passed, department investigators found.
Potentially hundreds of thousands of backdated letters may have been sent to borrowers, probably causing them “significant harm,” Benjamin Lawsky, New York’s superintendent of financial services, wrote in a letter to Ocwen released Tuesday.
“Ocwen’s indifference to such a serious matter demonstrates a troubling corporate culture that disregards the needs of struggling borrowers,” Lawsky wrote in the letter to the company’s general counsel.
In a statement, Atlanta-based Ocwen blamed software errors in the company’s correspondence systems for generating improperly dated letters.
The latest claims of wrongdoing against Ocwen come less than a year after the company agreed to reduce struggling borrowers’ loan balances by $2 billion as part of a settlement with federal regulators and 49 states over foreclosures abuses.
It’s the most recent evidence that many of the same kinds of abuses that made the housing crisis and the Great Recession worse are still happening some seven years after the housing bubble burst.
Ocwen is the fourth-largest mortgage servicer in the country and the biggest that isn’t a bank. It specializes in servicing high-risk mortgages. At the start of this year, it managed $106 billion worth of subprime mortgages, according to Inside Mortgage Finance, a mortgage industry tracker
Ocwen’s stock slumped $4.78, or 18.2%, to $21.48 on Tuesday.
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