The federal Consumer Financial Protection Bureau (CFPB) and 22 state regulators on Thursday filed lawsuits and enforcement orders against Ocwen Financial Corp. (OCN) alleging that the subprime mortgage loan servicer has failed in its obligations to serve its customers. Ocwen has issued statements disputing the allegations.
The CFPB lawsuit alleges that Ocwen has for years cost some borrowers money and caused others to lose their homes due to "widespread errors, shortcuts, and runarounds." The company allegedly has failed to send accurate monthly statements or properly credit payments, and it mishandled taxes and insurance payments.
Florida's attorney general filed a similar lawsuit on Thursday, and financial regulators in 22 other states have issued cease-and-desist and license revocation orders against Ocwen alleging faulty escrow management and other licensing issues.
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In a press release announcing its lawsuit, the CFPB made the following allegations against Ocwen:
- Serviced loans using error-riddled information
- Illegally foreclosed on homeowners
- Failed to credit borrowers' payments
- 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 borrower complaints
- Failed to provide complete and accurate loan information to new servicers
In its response this morning to state regulatory actions, Ocwen said:
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As with the recent CFPB enforcement action, Ocwen strongly disputes the key allegations made in the State Regulators' cease and desist orders that Ocwen's mortgage loan servicing practices have caused substantial consumer harm. Ocwen will not sign unfair and unjust consent orders that make impractical demands that no other market participant could rationally accept, and which would harm consumers. Under these circumstances, Ocwen has a responsibility to its customers, shareholders, and employees to vigorously defend the Company against unfounded claims while continuing to work with State Regulators to resolve any valid concerns.
In a press release Thursday disputing the CFPB allegations, Ocwen called the agency's lawsuit "an unreasonable action [that] is an unfortunate example of overreaching by the CFPB."
In 2013 Ocwen paid a total of $2.1 billion to settle similar accusations from the CFPB.
The company's shares dropped nearly 54% on Thursday to close at $2.49. Shares traded up about 8% Friday morning to $2.69. The stock's 52-week range is $1.29 to $6.15, and the 12-month consensus price target is $4.50.