Here’s a detailed breakdown of Ocwen’s new restrictions by state

A deeper dive reveals what Ocwen can and can’t do going forward

The servicing issues at Ocwen Financial are allegedly so widespread that some states are placing stricter restrictions on the nonbank, beyond freezing the company’s ability to acquire new mortgage servicing rights.

On Thursday, a group of state business regulators issued joint cease-and-desist orders to Ocwen. The main announcement from the states shows that an examination into Ocwen’s servicing shows “several violations of state and federal law, including, but not limited to, consumer escrow accounts that could not be reconciled and willful and ongoing unlicensed activity in certain states.”

The orders also showed that the regulators are concerned with Ocwen’s ability to continue operating due to financial constraints, an issue that Ocwen denies.

The orders prohibit the acquisition of new mortgage servicing rights and the origination of mortgage loans by Ocwen Loan Servicing, a subsidiary of Ocwen, until the company is “able to prove it can appropriately manage its consumer mortgage escrow accounts.”

However, HousingWire analysis of each state’s cease-and-desist order or accompanying press release, show that some states’ regulators are restricting Ocwen’s business much further than that.

In fact, in one state, Ocwen has basically been put of out business entirely.

All in all, Arkansas, Connecticut, District of Columbia, Florida, Hawaii, Idaho, Illinois, Maine, Massachusetts, Mississippi, Montana, Nebraska, Nevada, North Carolina, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, West Virginia, Wisconsin, and Wyoming each placed restrictions on Ocwen’s business, according to the Conference of State Bank Supervisors.

But several states’ restrictions were not equal to the others– namely Massachusetts and South Dakota.

According to the announcement from the Massachusetts Office of Consumer Affairs & Business Regulation’s Division of Banks, Ocwen is not only no longer allowed to acquire new mortgage servicing rights, the company is also no longer allowed to service mortgages in the state, at all.

Here’s how Massachusetts describes its reasoning for restricting Ocwen’s business:

Of paramount concern is the company’s deteriorating financial condition, in which the company has lost nearly $1 billion since 2014, and will not be profitable by its own estimations for at least two years. The company has not developed or implemented an effective plan to curb these losses.

The examinations and monitoring noted the company has shown ineffective management of consumer escrow accounts and their internal servicing systems.

Therefore, Massachusetts is requiring Ocwen to “develop and implement a plan to transfer its loan servicing activities for Massachusetts consumer mortgage loans to a Division-approved licensed loan servicer(s).”

That means Ocwen can no longer service any mortgages in the state and must work to transfer all current mortgages it services to other servicers.

According to the Massachusetts Division of Banks, Ocwen services approximately 34,472 loans in Massachusetts, representing 3.5% of Ocwen’s portfolio – all of which must be transferred away.

Massachusetts’ order also requires Ocwen to “either fund or place mortgage loan applications in process with other lenders at no loss to applicants, and to cease accepting new applications,” which means no new loans for Ocwen in Massachusetts either.

“The Division will be closely monitoring Ocwen’s compliance with the Order,” the Division of Banks’ order states. “During this time, consumers with mortgage loans serviced by Ocwen should continue to submit loan payments to Ocwen in normal course in accordance with their loan terms. Ocwen will continue to service these loans until an orderly transfer of the servicing is completed in accordance with the Order. Any current mortgage loan applications should continue to be processed.”

South Dakota also placed its own serious restrictions on Ocwen’s business in the state, in the form of halting all foreclosures in the state until the escrow issues are addressed.

Here’s how the South Dakota Department of Labor and Regulation’s Division of Banking described it:

Ocwen does not possess the competence, experience, character, or general fitness required to permit Ocwen to continue to acquire new business as a mortgage lender in South Dakota.

The public interest will be irreperably harmed if Ocwen’s mortgage lending liscense is not conditioned immediately.

Therefore, Ocwen is required to “immediately cease acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can show it is a going concern by providing a financial analysis that encompasses all of the liabilities Ocwen currently maintains, as well as liabilities it has knowledge it will incur in the course of its business.”

Ocwen is also required to “immediately cease from acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can provide a third-party audit of its South Dakota escrow accounts showing that borrower funds are appropriately collected, properly calculated, and disbursed accurately and timely, and make any corrections of whatever type necessary to remedy all mistake, errors, and improprieties occurring due to Ocwen’s actions.”

Ocwen is also required to “immediately cease any and all foreclosures in the state of South Dakota until all South Dakota escrow accounts have been correctly and properly balanced and all corrections due to mismanagement of the escrow accounts have been effected.”

Nearly all of the other states list the same restrictions: no new mortgage servicing rights and no new loans to be serviced by Ocwen Loan Servicing, except for Nebraska and Rhode Island, which each expect Ocwen to provide detailed reports on its servicing activity on a frequent basis going forward.

The Nebraska Department of Banking and Finance states that Ocwen is prohibited from “the acquisition of mortgage servicing rights and the origination of mortgage loans until they are able to prove they can appropriately manage their consumer mortgage escrow accounts.”

Beyond that, Nebraska’s order requires Ocwen to provide a list of all the residential mortgages it services in the state, including the name, address, telephone number, and state of residence of the borrower; as well as the loan number; the owner of the loan; the account balance; and the location of any escrow funds.

Ocwen is then required to provide a report on the status of every Nebraska loan it services to the Nebraska Department of Banking and Finance every 10 days.

Ocwen is also required to provide written notice of all servicing transfers within 72 hours of execution.

And in Rhode Island, Ocwen “shall immediately cease from acquiring new mortgage servicing rights and acquiring or originating new residential mortgages serviced by Ocwen, which mortgage loans are secured by Rhode Island property, until Ocwen can provide the Department of Business Regulation with a reconcilement of its escrow accounts showing that consumer funds are appropriately collected, properly calculated, and disbursed accurately and timely.”

Ocwen is also required to “immediately cease acquiring mortgage servicing rights and acquiring or originating new residential mortgages serviced by Ocwen, which mortgage loans are secured by Rhode Island property, until Ocwen can show it is a going concern by providing a financial analysis that encompasses all of the liabilities it currently maintains, as well as liabilities it has knowledge it will incur in the course of its business.”

Additionally, Ocwen is required to file written confirmation by 4 p.m. on May 22, 2017, stating that the company has stopped acquiring new mortgage servicing rights and acquiring or originating new residential mortgages serviced by Ocwen for properties in Rhode Island.

Ocwen is also required to provide the Rhode Island’s Department of Business Regulation with the following information: a list of all loans secured by Rhode Island property presently serviced by Ocwen, including the date such loans were originated; a list of all loans secured by Rhode Island property as to which Respondents are acting as a third party servicer, including the date such loans were originated; and a list of all pending acquisitions of servicing rights and applications for mortgage loans that would be secured by Rhode Island property that are in the pipeline.

Below is a list of the remaining states with relevant passages about each state’s restrictions on Ocwen:

ArkansasArkansas Securities Commissioner, B. Edmond Waters, issued a press release in connection with a cease and desist order issued against Ocwen Loan Servicing, LLC and Ocwen Mortgage Servicing, Inc. Ocwen Loan Servicing, LLC and Ocwen Mortgage Servicing, Inc. are ordered to cease and desist from acquiring new mortgage servicing rights and originating new mortgage loans. The order prohibits the acquisition of mortgage servicing rights and the origination of mortgage loans until the company is able to prove it can appropriately manage its borrower mortgage escrow accounts.

ConnecticutThe Commissioner finds that the public welfare requires immediate action in order to prevent irreparable and immediate harm to Connecticut borrowers and the necessity of a temporary order requiring Ocwen to cease and desist from violating the laws cited herein, pursuant to Section 36a-52(b) of the Connecticut General Statutes in that, since December 2013, State Mortgage Regulators, including this Department, have been concerned about Ocwen’s mortgage servicing practices including, but not limited to, the misapplication of borrower payments and inaccurate escrow accounting and statements, and that the recent Multi-State Examination and CT Examination indicate that these issues have not been resolved, but rather may be exacerbated.  In addition, Connecticut borrowers have no ability to select a different mortgage servicer to remedy such persistent and pervasive errors by Ocwen.  Considering the potential harm to Connecticut borrowers and Ocwen’s inability to provide sufficient information concerning its existing borrower escrow accounts, the Commissioner finds it imperative that Ocwen cease from acquiring new mortgage servicing rights in connection with Connecticut residential mortgage loans for which it would have to maintain escrow accounts, and acquiring or originating new Connecticut residential mortgage loans serviced by Ocwen for which it would have to maintain escrow accounts, until it can ensure that the escrow accounts of its existing residential mortgage loan servicing portfolio in Connecticut are properly reconciled and that all Connecticut borrowers’ monies are maintained in segregated deposit or trust accounts for the benefit of such Connecticut borrowers.

District of ColumbiaThe majority of the orders prohibit the acquisition of new mortgage servicing rights and the origination of new mortgage loans until the company is able to prove it can appropriately manage its existing mortgage escrow accounts and not further harm consumers. Some orders also require Ocwen to cease any ongoing unlicensed activity.

FloridaFiled a separate lawsuit over Ocwen’s servicing practices.

HawaiiThe Notice of Charges and Proposed Order prohibits the acquisition of mortgage servicing rights and the origination of mortgage loans until the company is able to prove it can appropriately manage its consumer mortgage escrow accounts. The Notice of Charges and Proposed Order also demands Ocwen to cease illegal unlicensed activity that is believed to be occurring in Hawaii.

IdahoThe department’s order prohibits Ocwen from violating Idaho law in the handling of consumer escrow accounts. Managing the money that borrowers remit as part of their monthly mortgage payments is critical to the business of a mortgage servicer, and the department’s order requires Ocwen to accurately and lawfully fulfill that function when dealing with Idaho borrowers’ mortgage payments.

IllinoisA search of the Illinois Department of Financial and Professional Regulation did not show record of Illinois’ actions against Ocwen.

MaineOcwen shall immediately cease acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can show it is a going concern by providing a financial analysis that encompasses all of the liabilities Ocwen currently maintains, as well as liabilities it has knowledge it will incur in the course of its business; Ocwen shall immediately cease from acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can provide the state regulators with a reconcilement of its escrow accounts showing that consumer funds are appropriately collected, properly calculated, and disbursed accurately and timely.

MississippiOLS shall immediately cease acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by OLS, until Ocwen can show it is a going concern by providing a financial analysis that encompasses all of the liabilities Ocwen currently maintains, as well as liabilities it has knowledge it will incur in the course of its business; OLS shall immediately cease from acquiring new mortgage servicing rights, and acquiring or originating new Mississippi residential mortgages serviced by OLS, until OLS can provide the DBCF with a third party audit of its escrow accounts associated with any Mississippi residential mortgage loans demonstrating that consumer escrow funds are appropriately collected, properly calculated, and disbursed accurately and timely; and make any and all corrections of whatever type necessary to remedy all mistakes, errors, and improprieties occurring in the past due to OLS’s Actions.

MontanaThe order prohibits Ocwen from acquiring new mortgage servicing rights until the company is able to establish that it can appropriately manage its Montana escrow accounts. Over the past three years, the Montana Division of Banking and Financial Institutions has handled 16 complaints against Ocwen and required Ocwen to credit $51,368.56 to Montana borrowers. Division officials will now focus on assisting borrowers who currently make mortgage payments to Ocwen.

NevadaThe majority of orders, including the order issued by the Nevada Division of Mortgage Lending, prohibit the acquisition of mortgage servicing rights and the origination of mortgage loans until the company is able to prove it can appropriately manage its existing mortgage escrow accounts and prevent harm to consumers.

North Carolina Lead state in announcing restrictions.

South CarolinaA search of the South Carolina State Board of Financial Institutions – Consumer Finance Division did not show record of South Carolina’s actions against Ocwen.

TennesseeThe Tennessee Department of Financial Institutions (“Department”) issued today an enforcement action against Ocwen Loan Servicing to prohibit the company from acquiring new mortgage servicing rights or originating mortgage loans in Tennessee until it provides the Department with a plan to demonstrate an ability to operate in a sound manner.

TexasA search of the Texas Department of Savings and Mortgage Lending did not show record of Texas’ actions against Ocwen.

West VirginiaA search of the West Virginia Division of Finance did not show record of West Virginia’s actions against Ocwen.

WisconsinThe majority of orders prohibit the acquisition of new mortgage servicing rights and the origination of mortgage loans until the company is able to prove it can appropriately manage its existing mortgage escrow accounts and not further harm consumers. Ocwen conducts mortgage loan servicing for approximately 1.5 million consumers nationwide, including about 13,500 in Wisconsin.

WyomingA search of the Wyoming Division of Banking did not show record of Wyoming’s actions against Ocwen.

[Editor’s note: If any of HousingWire’s readers can assist in locating the missing states’ orders against Ocwen, please contact Ben Lane at blane@housingwire.com. This article will be updated as appropriate.]

8 Responses

  1. I live in the State of Missiouri and I requested a loan modification from package from Ocwens and I was told I would get it and everything was fine with my loan and then I got a letter from Substute Trustee Corporation requesting all kind of auditioning money in behalf of Ocwen.

  2. Due, Agree totally! We’ve filed complaints when Ocwen’s Homeward was AHMSI. It was AHMSI’s two year botched HAMP loan mod that put our house into a perpetual foreclosure code! A mod taking 2 years and not four months is in no way our fault. We have apology letters from AHMSI/Homeward stating they were sorry for all the delays, and their DATA SYSTEMS caused our loan mod to be severely delayed. When we signed docs, we were signing our default notice. AHMSI did not disclose they were adding almost $60k to our balances, so when we got our first payment coupon, we were shocked at the increased escrow, principal balance, and deferred PB. It took 15 months to get an explanation of why increases were never disclosed to us. The rep we worked with was in LA. We could have driven to fix errors in person. When Ocwen took over in March 2013, they had our house listed for sale w/o contacting us, assigning a CRM, or adding a Due Diligence letter with their NOTS filing! All of the proof needed is in our file, yet with every QWR filed, Ocwen omits your original complaint, and Parrotts back a , “Your loan is is default as of 3/2010….. Really, we kinda guessed that when AHMSI didn’t bring capitalization forward until 8/2011! We had our local legal aid send a letter to Ocwen in Sept. 2013 stating that AHMSI was completely negligent and cause for the default coding. We also mentioned that OCN refused to accept $25k in Keep Your Home CA funds, without an explanation! Ocwen did not reply to attorney. Ocwen will not look at AHMSI being at fault, probably because Wilbur Ross, CEO at AHMSI/Homeward, wouldn’t want blame and further lawsuits. The CA DBO delicensed AHMSI in 2008-2009, and it’s time they do that again and join with the other 22 states and file Cease and Desist Orders. The DBO just let Ocwen off the hook, but sued them for $225 million. Homeowners will never see that relief, because as they did with us and KYHC or the “required $100k CFPB Principal Reduction that was Court Ordered”, and Ocwen wouldn’t give us due to “Investor Restrictions”, Ocwen will stall enough to steal more folks homes. We offered to reinstate several times, but they couldn’t get reinstatement quotes right. They’ve added almost $7k on Payoff Quotes, but $4,695 on Reinstatement Quotes.These are excessive fines and fees for AHMSI’s screw ups and Ocwen not researching our account in 2013 to really help us avoid foreclosure. Ocwen hired lawyers to offer us a loan mod in 3/2016. The only reason they did is because we went to the local DA for help in Dec. 2014. It still took Ocwen 15 months to take some action, even though we hadn’t given them permission for an attorney to contact us. The cheeseball attorneys in LA, H/A, you can guess who they are, offered us a $610 a month more loan mod. Yeah, that’s affordable for seniors. When I said, “We can’t afford that”, the female esq. said, “What can you afford”? Of course I asked for a $100k principal reduction via the CFPB to lower our payment by $400. She said she’d ask Ocwen and see if they could extend term to 40 years. We got an e-mail with a few details but no PR or extended term. The catch was she’d added a Non-Disclosure Agreement requirement, but didn’t include it’s rights stripping implications or details as a whole document. Our bank said don’t you dare sign that mod with an NDA. The second offer had a large BALLOON payment without an interest rate clearly stated, and inflated Principle and Deferred balances! We had a $11,352 Escrow refund that the lawyer, now a male supervisor, would not address, even after a complaint to the CFPB and the CA AG. Our account was frozen, we received no statements, and we could not talk to Research, Escrow, or the Ombudsman because Ocwen CODED our loan as ” In Litigation”. This was BS. We hadn’t hired an attorney. We couldn’t afford one. We went to legal aide and the DA because they investigate Residential Fraud in the DA’s fraud unit. Ocwen tried to foreclose again on 8/19/2016, even though their attorneys hadn’t sent complete loan mod docs in writing with the NDA. The female attorney lied to the DA and said we turned down the mods, therefore Ocwen called Altisource to proceed. The mod docs finally arrived after 10/19/16 and Ocwen coveniently says they have zero record of them. In fact, Ocwen now states they have none of the docs from the attorneys 7 month harassment fiasco! Ocwen is suppossed to have access to all docs so their CRM’s can see what actually happened. We are filing follow-up complaints with the CFPB, AG, and a big new complaint with the CA DBO. We’ll send the whole damn file to them so they can see what Ocwen has put us through. Ocwen knew my husband was ill and had a hospital visit that set us back, but they don’t care! Money is their only motivator.

  3. Have a new question Neil may be able to answer as a new subject.

    Once a loan is accelerated, it becomes due in whole and upon demand.
    At that point, to me, it seems it ceases to be a regular deal. That is, it’s a balance due, no longer a scheduled payment/payout on an amortization. Thus, becomes a collection activity, and not subject to regular ‘servicing’ any longer. While the original servicer, whom accelerated the debt probably retains ‘services’ related to that, it would seem impossible at that time for the ‘servicing’ function to be sold off to another Servicer. While it may be able to be sold off as a debt to be collected, servicing is no longer possible. So, when the servicer sells ‘servicing’ rights to another servicer, what are they selling? Collection rights on a debt, it appears to me. At that point, would they not be totally separated from original deal, and become a pure collection agent? My servicer has now changed two times since the original filing. In each case, they claimed to have become ‘Servicer’ for the Trust. To me, they bought debt and are just attempting to collect a debt. Would they at that point also be able to assume the identify of the Trustee in a pre-existing case?

    It’s a shell game. Where’s the ball?

  4. Many servicer’s are NOT LICENSED in your state. Shellpoint being one.Check your states bank license department.

  5. Same for all the banks/debt collector servicers in the state of Florida. My county clerk hung up on me when I asked why is he letting banks file robobsigned​ documents? Idk he yelled at me that he is just responsible to file that’s it!!! Iv wonder what makes one county clerk investigate and another not care? I was thinking if a specific county has a bond or loan with a back like Wells Fargo that has 75% if the court cases they are told to look the other way. Very sad in deed that we have a hand around our necks while they steal our homes right from underneath us. That hand around our neck? Are those fake signature s in the note, the undated endorsed in blank note, robobsigned assignments we are being strangled to death inside it homes. We need a plan. This is a crime. They are stealing our properties but people feel more compelled to March for science than to save our homes. Everyone is so ashamed of Foreclosure because it means they didn’t pay but why?????? House worth 50%less, unemployment, modification fraud (lost documents, told to default) this is a crime. No other name for it.

  6. Why no mention of Rhode Island? Please do not ignore Rhode Island when it comes restrictions on crooked servicers.

  7. Here in Massachusetts the same homeowner has had this happen twice. Back in 2015 he was without homeowners coverage for a full year, due to the fact Ocwen never paid the escrowed funds to MPIUA. Just this past week the same thing has happened-failure to pay MPIUA. Each time the homeowner who is self-employed, has had to lose pay just to handle this ongoing problem with Ocwen. Complaints had been filed in both instances with CFPB and MA. AG’S Office. I have to ask myself at what point do these AG’S and Federal Agencies STOP turning a blind eye to this ongoing problem surrounding Ocwen? It is apparent that these fines or slap on the wrist are not enough to deter such behavior. Since the housing crises and much research in the Registries of Deeds throughout Ma. the assignments being recorded to foreclose bear Robo-signed signatures, bogus notarization and are used to STEAL homes across this Commonwealth. Yet our Courts/Judges ignore these bogus documents and rubber stamp these foreclosures. It is apparent that Criminal Activity left unpunished continues to destroy the lives of many here in Ma., and most likely across this Country. Shame on all-Federal Agencies, Attorneys General, and Judges that have in the past and continue to be complicit with the criminal activity of these banks/lenders. As for Ocwen this is nothing more than a bump in the road, then back to business as usual continuing their scheme to destroy the lives of homeowners across this Country.

  8. Reblogged this on Mario Kenny.

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