Massachusetts already acted to prevent non-bank from operating in state
Massachusetts recently put Ocwen Financial out of business in the state as part of a wave of state regulators that placed various business restrictions on Ocwen for alleged rampant errors with homeowners’ escrow accounts and other issues at the non-bank, but it looks like the state isn’t done with Ocwen yet.
Specifically, Massachusetts’ Office of Consumer Affairs & Business Regulation’s Division of Banks recently prohibited Ocwen from acquiring new MSRs, prohibited it from originating new loans, prohibited it from servicing any mortgages in the state, and ordered Ocwen to transfer all mortgages it services to other servicers.
Ocwen fought back against Massachusetts’ regulations, asking a court to restrain the state’s cease and desist order because it would “cause significant harm” to its customers in the state.
But, the Division of Banks isn’t the only Massachusetts governmental entity that is now targeting Ocwen.
Recently, Massachusetts Attorney General Maura Healey announced that the state is suing Ocwen for widespread “abusive” mortgage servicing practices.
According to Healey’s office, Massachusetts’ lawsuit claims that Ocwen charged homeowners in the state for “unnecessary and expensive force-placed insurance policies, imposed excessive fees on delinquent borrowers, and failed to properly process escrow and insurance payments.”
Massachusetts’ complaint also claims that Ocwen failed to respond to borrower disputes about their accounts and to correct account errors.
Healey’s office alleges that Ocwen’s “servicing failures” increased Massachusetts’ borrowers’ mortgage and insurance payments, put borrowers at risk via lapses in insurance, and pushed borrowers into delinquency and foreclosure.
According to details from Healey’s office, Ocwen “has consistently fallen short” in its servicing operations in a number of ways, including (charges directly from Healey’s office):
- Funneling fees and commissions: Ocwen arranged for commissions and other fees to be paid to companies related to Ocwen, even though those companies did little or no work, resulting in higher charges to Massachusetts borrowers
- Improperly administering insurance premiums: Ocwen failed to disburse borrowers’ escrowed insurance premiums to insurers, causing their insurance policies to lapse, leaving them exposed to serious gaps in insurance coverage. The force-placed policies that Ocwen then puts in place are very expensive, carry high deductibles, and do not provide critical liability and personal property coverage
- Unnecessary flood insurance: Ocwen force-placed borrowers in expensive flood insurance policies for time periods when properties were not in special hazard flood area and did not require flood insurance
- Duplicative insurance policies: Ocwen force-placed certain borrowers who already had insurance coverage, either through their own homeowners’ insurance or through other policies that Ocwen itself had acquired on behalf of the borrowers
- Charging inflated and duplicative default-related fees: Ocwen took advantage of struggling borrowers by ordering unnecessary and duplicative title search, property inspection and landscaping services and then passing the costs on to the borrower
Healey’s lawsuit also accuses Ocwen of overcharging borrowers and failing to give them the necessary information to understand or dispute inappropriate charges.
The lawsuit alleges that Ocwen’s servicing issues led to inflated costs for borrower, which then led to “improper late fees, spiraling collection costs and unnecessary foreclosures.”
Healey’s office states that the lawsuit seeks civil penalties against Ocwen and injunctive relief to ensure the company’s “misconduct” is not repeated.
“It is alarming that one of the nation’s largest mortgage loan servicers has proven itself to be incapable of properly handing homeowners’ mortgages in Massachusetts,” Healey said in a statement.
“Borrowers are entitled to fair, competent, and accurate handling of their mortgage and escrow accounts,” Healey concluded. “We remain committed to helping homeowners avoid improper charges and abusive foreclosure practices.” http://www.housingwire.com/art...-servicing-practices