California is accusing Ocwen of defying requests for information by the California Department of Business Oversight, which is the licensing bureau for nonbank mortgage lenders and providers of collection and foreclosure services. The state is now seeking to suspend Ocwen’s mortgage license because Ocwen has failed to turn over documentation showing compliance with California laws protecting homeowners.
There have been investigations nationwide into Ocwen and other nonbank servicing firms who acquired mortgage accounts from the major banks who were facing state and federal inquests and investigations. Those major banks began selling off mortgage loans after they were caught in the nationwide blunders over robo-signing, losing and mishandling foreclosure paperwork and other foreclosure documents.
In the U.S., Ocwen has headquarters in Dunwoody, Georgia. They have nearly 6,500 employees on their payroll, with an estimated 4,600 of those based in their India operations centers and headquarters, 1,200 in the U.S. and 400 in the Philippines.
Ocwen specializes in acquiring troubled home loans and is the fourth largest mortgage servicer in the U.S. This isn’t the first time Ocwen has been in trouble with its practices. In December 2013, California Attorney General Kamala Harris announced a $2.1 billion Mortgage Settlement with Ocwen Financial Corporation and Ocwen Loan Servicing, LLC over alleged mortgage servicing misconduct.
If Ocwen loses its license in California, they would have to sell their rights to another company to handle bill collections and foreclosures in that state. California is currently Ocwen’s biggest source of business and would be a huge loss to the company. At the end of last year’s third quarter, Ocwen serviced almost 400,000 homes with an unpaid principal of $95 billion or 15% of their total loans and 23% of their total balance due.
California is not the only state questioning Ocwen’s practices at this time. The Consumer Financial Protection Bureau (CFPB), 49 state attorneys generals, and the monitor (Joseph Smith) for the 2012, $25 billion national settlement of foreclosure abuses are also looking into the Ocwen’s practices.
Less than six months ago, California examiners were telling Ocwen they had not supplied enough information to determine compliance with the Homeowners Bill of Rights. That bill provides a requirement that servicers have a single point of contact* for distressed borrowers and a ban on dual-tracking*. Despite demands and a judicial order, Ocwen never provided all the information to the examiners siting 10 separate requests over a period of 18 months.
Settlement conferences begin next month. If they fail, a hearing could occur as soon as July leading to Ocwen’s license suspension later this year. At that suspension, Ocwen would have to sell off its rights to service loans in California. It would be expected other states would follow California’s lead soon after.
*Colorado foreclosure defense attorney Keith Gantenbein worked extensively on two bills to help protect homeowners in our state. Both bills were signed into law by Governor Hickenlooper. One of those bills, HB14-1295 also prevents Dual Tracking and requires a Foreclosure Loan Single Contact. For more information, go to: www.gantenbeinlaw.com