Maine is one of 25 states that have banned Florida-based Ocwen Loan Servicing LLC, one of the country’s largest home mortgage loan servicers, from taking on any new business until allegations of illegal practices are resolved.

The U.S. Consumer Financial Protection Bureau filed a federal lawsuit in April accusing Ocwen’s parent company, Ocwen Financial Corp., of “years of widespread errors, shortcuts and runarounds,” costing some borrowers money and others their homes. Ocwen services more than 6,000 home mortgages in Maine.

A cease-and-desist order filed by the Maine Bureau of Consumer Credit Protection demands that Ocwen Loan Servicing immediately stop acquiring or originating new home mortgages or mortgage servicing rights in Maine until the company can prove that borrower funds are being collected, calculated and disbursed correctly. Twenty-four other states have filed similar orders, including Florida, Maryland, Massachusetts, Mississippi, Montana and Washington.

Mark Susi, staff attorney at the Maine BCCP, said Mainers have filed more than 50 complaints against Ocwen regarding its business practices. He said borrowers have complained that Ocwen failed to make escrow, tax and insurance payments on time, accurately recalculate escrow payments on an annual basis, and update loan balances to reflect payments made.

Susi said Maine’s cease-and-desist order essentially says, “We feel this activity is improper. Don’t do it anymore.”

Lauren Saunders, associate director of the Washington, D.C.-based National Consumer Law Center, said a multi-state examination to determine Ocwen’s compliance with federal and state laws and regulations identified several violations including, but not limited to, consumer accounts that could not be reconciled and “willful and ongoing unlicensed activity.”

“People have no choice of the mortgage servicer that handles their loan, and yet the servicer’s misconduct can cause families to lose their homes,” Saunders said in a news release. “That is why vigilance by the CFPB and state regulators is so important to send a message to financial service providers that misconduct will not go unpunished.”

Susi noted that Ocwen Financial Corp. has at least two subsidiaries that are licensed to sell home mortgages in Maine: Texas-based Homeward Residential Inc. and Georgia-based Liberty Home Equity Solutions, a reverse mortgage lender.

Those subsidiaries are allowed to continue doing business in Maine as long as Ocwen Loan Servicing does not service the loans, he said.

The CFPB lawsuit against Ocwen accuses the company of “failing borrowers at every stage of the mortgage servicing process.”

Perhaps most damning is the accusation that Ocwen illegally initiated foreclosure proceedings against at least 1,000 homeowners, including those who were fulfilling their obligations under a loan-modification agreement. Susi said it wasn’t immediately clear whether any of those foreclosures were initiated in Maine.

The lawsuit also alleges that Ocwen’s failure to make timely tax and insurance payments resulted in the lapse of homeowners’ insurance coverage for more than 10,000 borrowers.

Ocwen Financial Corp. has been struggling financially, posting a $32.6 million loss in the first quarter, and a $111.2 million loss in the fourth quarter of 2016.

Still, company CEO Ron Faris told investors last week during an earnings conference call that the state bans on new loan servicing business aren’t likely to hurt the company’s bottom line over the long term, and that Ocwen is working with state and federal regulators to address their concerns.

Faris told the group that the allegations of misconduct included in the Consumer Financial Protection Bureau lawsuit are false.

“It makes no sense that the CFPB deems our actions to be inappropriate,” he said.

J. Craig Anderson can be contacted at 791-6390 or at:

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