DFI joins other states in targeting loan servicer

The Wisconsin Department of Financial Institutions recently joined other states in issuing cease and desist letters against Ocwen Loan Servicing for alleged violations of state and federal law.

This decision comes as the federal Consumer Financial Protection Bureau is involved in action against the Florida-based mortgage loan servicer, having sued the company in April for “failing borrowers at every stage of the mortgage servicing process,” per a CFPB release.

CFPB claims Ocwen’s “years of widespread errors, shortcuts, and runarounds” have deeply affected borrowers, even causing some to lose their homes. The company focuses on servicing subprime or delinquent loans, and conducts loan servicing for about 13,500 customers in Wisconsin.

The Wisconsin Department of Financial Institutions is warning Ocwen customers to pay special attention to unusual activity, such as notices of expired or delinquent insurance while the company is escrowing for taxes.

DFI says if there is an issue, consumers should call the company and ask for an explanation directly. The agency instructs consumers to “take note of the person’s name that speaks to you, the time and date on which you spoke, and ask the customer service representative to make sure to note the conversation in your loan file.”

Ocwen is one of the biggest mortgage lenders in the country, with nearly 1.4 million loans contracted as of the end of 2016.

“Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes,” said CFPB Director Richard Cordray. “Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment.”

An investigation into the company’s actions was headed by officials in Florida, Maryland, Massachusetts, Mississippi, Montana, and Washington. This investigation found “willful and ongoing unlicensed activity.”

“People have no choice of the mortgage servicer that handles their loan, and yet the servicer’s misconduct can cause families to lose their homes,” said Lauren Saunders, associate director of the nonprofit National Consumer Law Center advocacy/public policy group. “That is why vigilance by the CFPB and state regulators is so important to send a message to financial service providers that misconduct will not go unpunished.”

The state officials that looked into Ocwen’s suspicious activity ordered the company to stop acquiring or originating new residential mortgages or mortgage servicing rights until it can prove consumer dollars are being appropriately handled.

CFPB says it found “substantial evidence” that the company engaged in “significant and systemic misconduct.”

In its lawsuit, the agency claims Ocwen:

*Serviced loans using error-filled information.

*Illegally foreclosed on homeowners.

*Failed to credit payments from borrowers.

*Botched escrow accounts.

*Mishandled hazard insurance.

*Bungled borrowers’ private mortgage insurance.

*Deceptively signed up and charged borrowers for add-on products.

*Failed to assist heirs seeking foreclosure alternatives.

*Failed to adequately investigate and respond to borrow complaints.

*Failed to provide complete and accurate loan information to new servicers.

Its complaint was filed in federal district court for the Southern District of Florida, and seeks a court order forcing the company to pay penalties for these actions.

–By Alex Moe