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.
Citigroup Inc (C.N) said on Monday it would speed up the transformation of its U.S. mortgage business by exiting servicing operations by the end of 2018.
Citi said it would sell its mortgage servicing rights on about 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers to New Residential Mortgage LLC (NRZ).
The remaining Citi-owned loans and other mortgage servicing rights not sold to NRZ are expected to be transferred to loan servicing provider Cenlar FSB [CENLR.UL] in 2018.
The lender said it expected these deals to hurt first-quarter pretax results by about $400 million, including a loss on sale and certain related transaction costs.
The move is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital as the company focuses on mortgage originations.
It only took a little more than six months for Bank of America Merrill Lynch to decide to pull the rest of its mortgage servicing business from PHH Mortgage Corporation, marking another devastating blow for the company.
PHH Mortgage, a wholly-owned subsidiary of PHH Corp., announced in an 8-K filingwith the Securities and Exchange Commission that it received written notice from Bank of America that it is terminating its agreement with PHH, meaning the company will no longer provide private label origination services on behalf of Merrill Lynch, effective March 31, 2017.
ORDOVA, TN (WMC) –
A Shelby County Circuit Court lawsuit and government records revealed a pattern of fraud allegations against mortgage-servicing company Nationstar Mortgage.
The WMC Action News 5 Investigators launched an investigation of the Dallas-based mortgage-servicer after it foreclosed on the Cordova, Tennessee, home of Linda Howard. Howard and her husband had owned the home since 1998. Her attorney Kevin Snider produced records that proved Howard never missed a payment since Nationstar Mortgage started servicing her mortgage in 2011.
Also according to the records, Nationstar Mortgage suddenly started refusing her monthly payments in February of this year. From February to May, the company sent her payments back with statements posting thousands of dollars in unexplained fees like “property inspections” and “disbursement insurance.”
“I wrote them. I called them. And I got no response,” Howard said.
Snider said Nationstar Mortgage kept returning Howard’s payments and kept ignoring her requests for explanation of the fees until it foreclosed on her house in May, then sold it at auction. “Nationstar improperly foreclosed on the property,” Snider said.
Right as Ocwen Financial fixed previous compliance failures, the servicer is hit with two new compliance failures, according to the latest oversight report on Ocwen from the office of Joseph Smith, who is the monitor of the National Mortgage Settlement.
In the last report from the NMS, Ocwen failed to be back in compliance with one of the performance metrics of the National Mortgage Settlement that it failed in the second half of 2014. And because of those issues, Ocwen had to place 17,300 loans that “could have been affected” by this issue on foreclosure hold.
These issues are now resolved, according to the latest report.
Smith’s office permitted Ocwen to lift the foreclosure sale hold in July 2016 after it mailed corrected loan modification denial notices to affected borrowers and provided a sufficient timeframe for the borrower to appeal the denial.
Mortgage servicers looking to get their hands on some Fannie Mae and Freddie Macmortgage servicing rights have that opportunity, as $2.8 billion in Fannie and Freddie MSRs just hit the market.
According to MountainView Servicing Group, which is acting as the exclusive sale advisor, the portfolio features the mortgage servicing rights on 12,713 loans with an average loan size of $223,765.
It appears that PHH Corp. has a subservicing problem on its hands, as for the second time in four months, the company is about to lose a large portion of its mortgage subservicing portfolio.
PHH disclosed Thursday that it recently received notice from HSBC Bank that it plans to sell the mortgage servicing rights on approximately 139,000 mortgage loans currently subserviced by PHH Mortgage Corporation, a wholly-owned subsidiary of PHH, on behalf of HSBC.
In an 8-K filing with the Securities and Exchange Commission, PHH said that HSBC informed the company that the purchaser of the mortgage servicing rights does not plan to continue using PHH as a subservicer.
PHH said that the portfolio of loans it’s set to lose subservicing rights for represents approximately 29% of the company’s total subservicing portfolio units, as of June 30, 2016.
August 8, 2016 Update: Payments to nearly 650,000 borrowers of servicers supervised by the Federal Reserve who cashed or deposited their initial checks to begin on August 8
At the direction of the Federal Reserve, on August 8 and 15, the paying agent, Rust Consulting, Inc. (Rust) will mail payments to nearly 650,000 eligible borrowers of Federal Reserve supervised servicers who cashed or deposited their initial checks from the Independent Foreclosure Review (IFR) Payment Agreement by the March 31, 2016 deadline. The redistribution of funds remaining from the IFR Payment Agreement that were attributable to Federal Reserve supervised servicers will provide a total of over $80 million to borrowers, consistent with the Federal Reserve’s intention to distribute the maximum amount of funds to borrowers potentially affected by deficient servicing and foreclosure practices.
Under the redistribution, every eligible loan will receive a payment of $124.30. Borrowers receiving a redistribution payment will have the opportunity to request a name on a payment to be changed, a payment to be split, or a payment to be reissued. All requests must be received by Rust no later than September 30, 2016. In early-November, there will be a one-time mailing of redistribution check reissuances to accommodate all reissue, payee change, and split check requests. All redistribution checks will expire on December 31, 2016.
Servicers covered include GMAC Mortgage, Goldman Sachs/Litton Loan Servicing, Morgan Stanley/Saxon Mortgage Services, and SunTrust. In addition, some borrowers whose loans were serviced by HSBC or JPMorgan Chase may be covered. HSBC and JPMorgan Chase borrowers should contact Rust at 1-888-952-9105 to determine whether their loan was serviced by the part of the servicing operations of those two companies that is supervised by the Federal Reserve.
NAFCU pushes back against new rule’s “unintended consequences”
The Consumer Financial Protection Bureau finalized new regulations Thursday that it says will ensure homeowners and struggling borrowers are treated fairly by mortgage servicers.
The final mortgage servicing rule will require servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan, clarifies borrower protections when the servicing of a loan is transferred and provides loan information to borrowers in bankruptcy.
“The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon,” said CFPB Director Richard Cordray.
“These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable,” Cordray said.
OAKLAND, Calif. (CN) – Lawyers for a group of homeowners clashed with Citibank attorneys at a Tuesday hearing on whether the mortgage loan servicer committed fraud by charging delinquent borrowers unnecessary fees for property inspections.
In an order denying the homeowners class certification last year, U.S. District Judge Yvonne Gonzalez Rogers said the case hinges on a contract dispute, as the mortgage terms govern the validity of the charges, and inspection fees are authorized by the plaintiffs’ mortgage agreements under certain circumstances.
“Citi’s liability rises or falls on whether a fact-finder determines that a property inspection fee was authorized by the borrower’s mortgage agreement,” she wrote.
At the Tuesday hearing, Gonzalez-Rogers asked whether the plaintiffs, who live in Alabama, could choose to bring a fraud claim under Alabama law over a breach of contract claim.
In her 2012 lawsuit, lead plaintiff Gloria Stitt claimed Citi colluded with subsidiaries, affiliates and vendors on a profit-making scheme to charge unnecessary and marked-up fees to homeowners for property inspections once they defaulted on their mortgage payments. Stitt said vendors padded fees “often by 100% or more,” but never informed borrowers of the markups or profits. A borrower named Diana Ellis brought a similar lawsuit against J.P. Morgan Chase.
“It’s not a breach of contract to defraud someone of money by asking them for money they’re not obligated to pay: It’s fraud,” said Daniel Alberstone, attorney for the Citi plaintiffs.
He said that Citibank had been told explicitly by investors not to charge delinquent borrowers for certain inspections, but went ahead and charged them anyway.