Regulators sue Ocwen Financial, say it mishandled mortgages

Shares of Ocwen Financial tumbled after U.S. and state regulators said they were suing the mortgage-servicing giant

Shareholder Rights Law Firm Johnson & Weaver, LLP is investigating potential violations of the federal securities laws by Ocwen Financial Corporation (NYSE: OCN) and certain of its officers.

It's been a decidedly rough afternoon for Ocwen Mortgage Servicing, Inc.

It added that numerous issues were addressed in its 2013 settlement with the CFPB and that the allegations in the new complaint represent "only a small percentage of Ocwen's 1.3 million customers".

The Michigan Department of Insurance and Financial Services issued a cease and desist order to Ocwen on Thursday and said that Ocwen has had difficulty keeping accurate records and with properly crediting borrowers' payments. Ocwen, through its subsidiaries, is engaged in the servicing and origination of mortgage loans in the United States and internationally.

US and state officials sued Ocwen Financial Corp.

"Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes", CFPB Director Richard Cordray, who was appointed by President Obama, said in a statement. The CFPB's complaint, filed today, alleged the Ocwen "engaged in significant and systemic misconduct at almost every stage of the mortgage servicing process".

The West Palm Beach, Fla., company also was accused of illegally starting foreclosure on at least 1,000 consumers and relying on a system to service loans that even an Ocwen executive called "ridiculous" and a "train wreck", the bureau said in news release.

A spokesman for Ocwen said a statement was forthcoming.

Florida Attorney General Pam Bondi (R) on Thursday filed a separate federal suit against Ocwen before the same court.

Ocwen said it would respond to the state mortgage regulators after reviewing their orders.

In perhaps the most damning passage, the Commissioner of Banks claims that if the servicer were to include these liabilities, "it would indicate that Ocwen continuing as a going concern would be in doubt".

Ocwen is one of the country's largest non-bank mortgage lenders, with a portfolio of almost 1.4 million loans and a balance of $209 billion.

"Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment", the statement continued. The frustrating and expensive experience of one consumer cited in the CFPB lawsuit illustrated the problems some borrowers confronted when dealing with Ocwen.

The company said the accusations by the federal agency are "inaccurate", "unfounded" and the result of a "self-serving conclusion". "I can't tell you the number of hours I and others spend on basic servicing technology blocking and tackling".

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