Mortgage Fraud Update: Ocwen Ordered to Cease & Desist Mortgage Servicing and Debt Collection by the Massachusetts Division of Banks

MORTGAGE UPDATE: The Massachusetts Division of Banks has issued a Cease & Desist Order and Demand for Order to Show Cause against one of the largest mortgage servicers in Massachusetts and the country: Ocwen [Ocwen Financial Corporation].  NYSE Stock ticker OCN.  On April 20th, the date the Division of Banks issued its Cease & Desist Order [along with 20 other states], Ocwen’s stock suffered a significant loss as shareholders and hedge funds that invest in mortgage-servicing have downgraded the stock. 

The eighty-three (83) paragraph demand contains a recitation of fraudulent activities, failure to keep accurate records, instances of inflated fees, inappropriate escrow charges, and many other consumer protection violations that have harmed homeowners over the last many years of servicing and debt collection in Massachusetts.  Specifically at the end of the demand, the Mass. Division of Banks Orders Ocwen to do the following:

  1. Within 30 days of this order, Ocwen shall seek the Division’s approval by submitting in writing the licensed loan servicer(s) to which Ocwen intends to transfer all of its mortgage servicing and debt collection activities.  Ocwen may transfer its mortgage servicing rights or may engage sub-servicer(s);
  2. Within 120 days after the Division’s approval of transferee loan servicer(s), Ocwen will effectuate the transfer all of its mortgage servicing and debt collection activities; and
  3. Ocwen will transfer all of its mortgage servicing and debt collection activities in a manner compliant with all federal and state regulations, including but not limited to the Real Estate Settlement Procedures Act (RESPA).

To read the Cease & Desist Order, click here: Mass. Division of Banks Order to Cease & Desist Against Ocwen

Since the Order was delivered on April 20th, 2017, the Division of Banks has released a Fact Sheet providing reasoning, guidance, and the statistics about Ocwen and the reasoning for the Cease & Desist Order.  To read the Fact Sheet, click here: Fact Sheet re: Ocwen by Division of Banks

It is uncertain at this point whether or not Ocwen will file suit in U.S. District Court of Massachusetts (Federal) or Suffolk Superior Court (State Superior) and seek injunctive relief to prevent this order from going into effect, etc.  What is almost certain, however, is that on some level, Ocwen will seek an extension of time to battle the order and seek additional time to transfer significant data/files/mortgages to other services.  The Cease & Desist order comes as the Consumer Financial Protection Bureau institutes stricter rules and regulations to prohibit mortgage fraud, abuse to homeowners, and the illegal debt collection of inflated or inappropriate fees.

The Division of Banks has the power to revoke a license to service mortgages in Massachusetts, and the Office of Consumer Affairs and Business Regulation has the power to revoke the license and ability to collect a debt from Ocwen.  By revoking these two incredible lucrative and powerful licenses, Ocwen would be powerless in Massachusetts (and potentially the other 20 states where similar cease and desist orders were served upon Ocwen).  Ocwen makes its money by servicing mortgages – accepting payments, creating and sending mortgage account statements to homeowners, charging fees for servicing mortgages, and ultimately passing the collected payments to securitized mortgage trusts (massive conduits that contain bundled mortgages packaged together by Wall Street investment banks).

What Should the Massachusetts Homeowner Do Next?

  1. If you have received (ever or recently) a mortgage account statement or notices regarding your notice from Ocwen Loan Servicing, you should carefully review your statements and payment history for errors.  Specifically, Ocwen has a history of misapplying mortgage payments (not crediting payments to your principal and interest or overall balance), charging fees for inspections that never occurred, and charging large escrow fees for homeowner’s insurance of real estate taxes even if the homeowner is paying them.
  2.   If you suspect issues with your mortgage servicing, you should contact your mortgage servicer with a notebook and pen and take down the name, employee ID number and contact info of the representative you speak to, and take detailed notes regarding your mortgage, the questions you ask, and the answers you receive.  Remember, many of these phone calls are recorded so don’t be afraid to ask the hard questions, ask for a full updated accounting and question your mortgage company.  Write down their answers and statements because it can be used against them later.
  3. If after doing the above, you still suspect mortgage fraud or issues exist with your mortgage or mortgage servicing, you should contact the Firm by calling (617) 765-4429 – Alex R. Hess Law Group.

How Can Massachusetts Residents or the American Homeowner Protect Their Finances?

  1. Check your Investments.  Now is an excellent time to review your holdings in 401(k)s, brokerage accounts, stock investments, pensions, and see if you have a stake in Ocwen Financial Corporation [NYSE: OCN].  The future for Ocwen is uncertain.  If the orders to cease mortgage servicing prevail, the company will lose a significant amount of money, and the stock will suffer.  If Ocwen chooses to battle the orders, it will spend millions in legal fees in 20 different states battling the Attorneys General and proving wrong the mortgage fraud audits already conducting against Ocwen.  Whether or not the outcome of complex mortgage fraud litigation, and the uncertainty of a jury trial or judge’s decision, what could be certain are the large legal bills.
  2. Check your Mortgage.  Re-examine your mortgage (even if not serviced by Ocwen) for unauthorized fees, unapplied or misapplied payments, or expenses for taxes or insurance that you have paid.

Given the above information, and the billions of dollars at stake in collecting mortgage payments from Massachusetts homeowners, this Cease & Desist Order by the Mass. Division of Banks against Ocwen could shut off the faucet of money to the large finance company.   More importantly, it could provide serious protections for the Massachusetts homeowner.  If you suspect mortgage fraud with your account, please contact the Firm at (617) 765-4429 or by submitting the contact form below.

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