Regulators list many mortgage errors at Ocwen Financial

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For the second time since 2013, the U.S. Consumer Financial Protection Bureau on Thursday sued Ocwen Financial Corp (OCN.N) over accusations of widespread misconduct in how it serviced borrowers' loans, from foreclosure abuses to a basic failure to send accurate monthly statements.

Regulatory agencies in North Carolina and other states issued cease-and-desist orders related to Ocwen's conduct.

It said the company would go after borrowers long before verifying whether the debt was valid, allegedly foreclosed illegally on at least 1,000 homeowners, and charged borrowers for add-on products without their consent.

"If I could change systems tomorrow I would", the Ocwen executive said.

"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.

Federal and state regulators say Ocwen Financial — one of the nation's largest mortgage lenders that is not a bank — made numerous errors in the mortgages it serviced.

Earlier this year, an Ocwen subsidiary, Ocwen Loan Servicing, signed a $225 million settlement with California regulators to settle allegations it overcharged active-duty military members, was late in providing key information for some civilian borrowers seeking to modify their loans and violated other laws.

Instead, the company responded in January that reconciliation of the accounts in question "would cost $1.5 billion, and be well beyond Ocwen's financial capacity to fund" according to the North Carolina order.

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".

At year-end 2016, Ocwen serviced almost 1.4 million loans with a total unpaid balance of $209 billion, according to CFPB.

Mortgage servicers process paperwork and repayments, deal with loan modification requests and perform other tasks involving borrowers - who have no say in selecting the servicing companies and typically can not switch to other firms. According to the lawsuit, Ocwen's head of services called the company's technology "an absolute train wreck". Ocwen's shares fell the most on record.

After receiving her May mortgage statement, the borrower reported that Ocwen mistakenly placed her principal and interest payment into a suspense account.

"The CFPB suit is primarily based on the CFPB's flawed review of data and its self-serving conclusion about isolated instances where Ocwen self-identified ways we can do better", the company said.

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