Last week, a raft of state regulators clamped new business restrictions on Ocwen Financial for alleged rampant errors with homeowners’ escrow accounts and other issues at the nonbank.
Ocwen said last week that it intended to fight back against the state regulators’ accusations and business restrictions, and the company did just that on Tuesday, announcing that it is taking the regulators in Massachusetts and Illinois to court to fight for its ability to operate within the states.
Most of the 20+ states that took regulatory actions against Ocwen over the alleged escrow issues restricted Ocwen’s ability to acquire new mortgage servicing rights and originate new loans.
But some states went even further, especially the state of Massachusetts, which basically put Ocwen out of business in the state.
According to the Massachusetts Office of Consumer Affairs & Business Regulation’s Division of Banks, Ocwen is prohibited from acquiring new MSRs, prohibited from originating new loans, and is also prohibited from servicing any mortgages in the state and must work to transfer all mortgages it services to other servicers.
Massachusetts also ordered Ocwen to move any new mortgage applications in process with other lenders “at no loss to applicants,” and ordered the company to cease accepting new mortgages applications as well.
Illinois’ restrictions, which cover Ocwen Loan Servicing, Homeward Residential, and Liberty Home Equity Solutions, state that each company is no longer allowed to acquire new mortgage servicing rights or originate new residential mortgages.
But Ocwen said Tuesday that those restrictions will “cause significant harm” to consumers in those two states and wants the restrictions removed immediately.
To that end, Ocwen filed two emergency motions requesting immediate court action to restrain the cease and desist orders brought by the Illinois Department of Financial and Professional Regulation, Division of Banking and the Massachusetts regulator.
“Ocwen believes that the Illinois and Massachusetts orders will cause significant harm to the consumers in those states, including potentially those consumers with pending mortgage applications, and those seeking loan modifications,” the company said in a statement. “Under these circumstances, Ocwen has a responsibility to its customers, shareholders, and employees to vigorously defend the company.”
According to Ocwen, the issues at the core of the states’ regulatory actions are not new, and have been previously addressed by the company.
Ocwen said that over the course of the last two years, Ocwen and the company’s board of directors have been in “regular communication” with its state mortgage regulators, including those in Illinois and Massachusetts.
During that time, which is the time since the Multi-State Mortgage Committee investigation ended, Ocwen said that it shared information about the “significant operational and programmatic enhancements” the company has made.
Ocwen also said that its escrow practices, which are at the heart of the states’ actions, are “in line with common industry standards for timeliness and accuracy,” despite what the states’ claim.
Because of those factors, Ocwen believes it should be allowed to continue to operate in Massachusetts and Illinois and told the courts as much.
Ocwen also said that its response to the states’ actions is not over yet either. The company said that it plans to appeal or respond to each of the remaining state mortgage regulators actions soon.
“In the meantime, Ocwen remains committed to working with Illinois, Massachusetts, and the other state regulators to resolve any valid concerns, and has commenced those efforts,” Ocwen said Tuesday.
