The CFPB has filed a proposed court order with authorities in 49 states and the District of Columbia that requires Ocwen Financial Corp., the country’s largest nonbank mortgage loan servicer, to pay back $125 million and to provide $2 billion in principal reduction for underwater borrowers.
Atlanta-based Ocwen specializes in subprime or delinquent loans and focuses on resolving delinquency through loss mitigation or foreclosure.
“The consent order addresses Ocwen’s systemic misconduct at every stage of the mortgage servicing process. Ocwen must also refund $125 million to the nearly 185,000 borrowers who have already been foreclosed upon and it must adhere to significant new homeowner protections,” the CFPB said Thursday in a release.
Ocwen collects payments from mortgage borrowers and sends them to the owner of the loan, customer service, loan modifications, collections and foreclosures.
The CFPB claims Ocwen engaged in illegal foreclosure practices, took advantage of borrowers by imposing unauthorized fees, failed to apply payments on time and did not maintain accurate account statements. CFPB also said Ocwen “deceived consumers about foreclosure alternatives and improperly denied loan modifications.”
Ocwen recently acquired some of its competitors such as Homeward Residential Holdings LLC and Litton Loan Servicing LP as well as the mortgage servicing rights from portfolios held by some of the largest banks in the U.S.
“Deceptions and shortcuts in mortgage servicing will not be tolerated,” said CFPB Director Richard Cordray in a statement. “Ocwen took advantage of borrowers at every stage of the process. Today’s action sends a clear message that we will be vigilant about making sure that consumers are treated with the respect, dignity, and fairness they deserve.”