Ocwen Financial Corp.’s declining fortunes took another dip on Thursday when a federal agency and regulators in two states filed suits accusing the mortgage company of a litany of predatory practices.
Shares of West Palm Beach-based Ocwen (NYSE: OCN), already battered by years of consumer complaints and regulatory actions, plunged more than 50 percent Thursday afternoon. In perhaps the biggest blow, North Carolina led 20 states in barring Ocwen from taking on new business in their states until Ocwen can prove it accurately accounts for money in escrow accounts.
“Ocwen has consistently failed to correct deficient business practices that cause harm to borrowers,” North Carolina Commissioner of Banks Ray Grace said in a statement. “We cannot allow this to continue.”
Meanwhile, echoing longstanding gripes from borrowers, the federal Consumer Financial Protection Bureau slammed Ocwen.
MORE OCWEN COVERAGE
“Ocwen’s years of widespread errors, shortcuts, and runarounds cost some borrowers money and others their homes,” the CFPB said. “Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments and handling taxes and insurance.”
A mortgage servicer, Ocwen collects loan payments and keeps escrow accounts on behalf of borrowers. The CFPB said Ocwen wrongfully foreclosed on at least 1,000 borrowers.
Regulators also faulted Ocwen for making late payments to insurers from borrowers’ escrow accounts, leading some 10,000 homeowners to lose their coverage. Some of those borrowers landed in expensive “forced-place” insurance.
And Ocwen neglected to end private mortgage insurance for borrowers whose home equity hit the 80 percent threshold. Those borrowers paid $1.2 million in unnecessary mortgage insurance, the CFPB said.
Ocwen called the CFPB’s allegations “inaccurate and unfounded.”
“Ocwen strongly disputes the CFPB’s claim that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm,” the company said in a statement. “In fact, just the opposite is true. Ocwen believes its mortgage loan servicing practices have and continue to result in substantial benefits to consumers above and beyond other mortgage servicers.”
While the CFPB, an Obama-era creation, is a favorite target of Republicans pointing to regulatory overreach, Ocwen has run afoul of overseers on both sides of the aisle. Also Thursday, Pam Bondi, Florida’s Republican attorney general, sued Ocwen.
“Since 2014, when we first entered the multistate settlement with Ocwen, we have listened to Ocwen’s promises that they would ‘right the ship’ and resolve the improper mortgage servicing and foreclosure misconduct that has plagued it,” Bondi said in a statement. “Enough is enough. Florida’s distressed Ocwen borrowers should no longer have to endure costly servicing errors and unfair practices.”
Ocwen already was reeling from a regulatory crackdown. Former Chairman Bill Erbey, whose stake in the company once made him a billionaire, was forced out of Ocwen.
Erbey still owns 21.4 million shares of Ocwen. On Thursday morning, Erbey’s shares were worth $118 million. After Thursday’s barrage of bad news, the value of Erbey’s stake had plunged to just $55 million.
Ocwen faces financial struggles, too. Its revenue fell to $1.4 billion in 2016, down from $1.7 billion in 2015, and the company lost $200 million for the year.