The CFPB last week filed a massive civil damage case against top-ranked mortgage servicer Ocwen Financial, accusing the nonbank and its subsidiaries, Ocwen Loan Servicing, LLC, and Ocwen Mortgage Servicing, Inc., of “failing borrowers at every stage of the mortgage servicing process.” The agency alleges that Ocwen’s “years of widespread errors, shortcuts and runarounds cost some borrowers money and others their homes.” Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance. The agency added that Ocwen also illegally foreclosed on struggling borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers’ records. Among the CFPB’s major allegations was that the ...

The CFPB was not alone in its crackdown last week on Ocwen Financial over its alleged mortgage servicing failures and violations. The same day the bureau announced its action, Florida Attorney General Pam Bondi and Office of Financial Regulation Commissioner Drew Breakspear filed a federal civil consumer protection lawsuit against Ocwen and subsidiaries, Ocwen Loan Servicing, LLC, and Ocwen Mortgage Servicing, Inc., for what they called “mortgage servicing misconduct.” According to the complaint, Ocwen harmed citizens of the Sunshine State by filing illegal foreclosures, mishandling loan modifications, misapplying mortgage payments, failing to pay insurance premiums from escrow and collecting excessive fees. Ocwen services roughly 125,000 home mortgages in the state. The complaint, filed in federal court in West Palm Beach, ...

Ocwen Financial, stung by legal actions brought simultaneously last week by the CFPB and scores of state regulators, responded by issuing a detailed statement disputing the allegations made by state regulators and defending its business practices. “As with the recent CFPB enforcement action, Ocwen strongly disputes the key allegations made in the state regulators’ cease-and-desist orders that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm,” the company said. “Ocwen will not sign unfair and unjust consent orders that make impractical demands that no other market participant could rationally accept, and which would harm consumers,” it added. “Under these circumstances, Ocwen has a responsibility to its customers, shareholders and employees to vigorously defend the company against unfounded claims while ...

The Trump administration’s Department of Justice has convinced the U.S. Court of Appeals for the District of Columbia Circuit to grant it 10 minutes to present its unusual case when oral arguments are heard in the upcoming en banc proceedings in PHH Corp. v. CFPB. “Upon consideration of the unopposed motion of the United States for leave to participate in oral argument, it is ordered that the motion be granted,” the appeals court said in its one-page order. PHH Corp. et al., as petitioners will have 30 minutes to make their case, as will the CFPB as respondent. “The United States agrees with petitioner PHH Corp. that the for-cause removal provision is unconstitutional, but agrees with the CFPB that the ...

The Conference of State Bank Supervisors urged the leadership of the Senate Banking, Housing and Urban Affairs Committee to enact legislation that would grant qualified-mortgage status under the CFPB’s ability-to-repay rule for loans held in portfolio, as part of a broader set of proposals to stimulate economic growth. The CSBS was one of a number of groups that responded to an invitation by the banking committee to provide ideas for stimulating economic activity. “State regulators have long supported a flexible approach to underwriting for institutions that retain mortgages in portfolio because interests are inherently aligned between consumers and lenders that retain 100 percent of the risk of default,” said the CSBS. “One solution that would tailor the requirement to the ...

The CFPB’s latest fair lending report to Congress, quietly distributed earlier this month, indicates that two mortgage issues will stay on the agency’s front burner: redlining and servicing. On the redlining front, the CFPB said it will “work to evaluate whether lenders have intentionally discouraged prospective applicants in minority neighborhoods.” When it comes to servicing, the bureau indicated it will “determine whether some borrowers who are behind on their mortgage … payments have more difficulty working out a new solution with the servicer because of their race, ethnicity, age, or gender.” The agency continued: “We are committed to ensuring fair, equitable and nondiscriminatory access to credit by finding and eliminating discriminatory lending practices, and also by encouraging lenders to maintain ...

School Accrediting Body Wins One Against the CFPB. The U.S. Court of Appeals for the D.C. Circuit has upheld a district court ruling that a civil investigative demand (CID) issued by the CFPB against the Accrediting Council for Independent Colleges and Schools (ACICS) is unenforceable. This is a big deal, and not just as it relates to the bureau. “The decision represents the first time in decades that a federal appeals court has struck down an administrative subpoena issued by the federal government,” said Allyson Baker of Venable LLP, who served as one of the lead counsel for the firm on behalf of ACICS....

The Federal Home Loan Bank of New York settled a lawsuit with Lehman Brothers last week stemming from claims the bank undervalued interest rate swaps in 2008. In Lehman Brothers Holdings Inc. v. Federal Home Loan Bank of New York, documents show that the bank will pay $70 million to the Lehman bankruptcy estate. A recent FHLBank of NY filing with the Securities and Exchange Commission revealed...

With the potential for restrictions placed on Ocwen Financial to be removed in the near future, officials at the nonbank stress that Ocwen has transformed compared with when the restrictions were applied. Near the end of 2014, Ocwen agreed to a $150.0 million settlement with the New York Department of Financial Services. Among other provisions, the settlement required Ocwen to meet certain benchmarks and receive approval from the state regulator before acquiring ...

A steep drop in VA-backed securities issuance in the first quarter of 2017 suggests that Ginnie Mae’s efforts to curb serial refinancing of VA loans are working, according to agency officials. Speaking on a panel at the annual VA Lenders Conference in Kansas City, MO, this week, Ginnie executives said that a change in pooling requirements for streamlined refinance mortgages appears to have curbed a destructive appetite for refinancing new VA loans within six months of closing. The practice has caused faster prepayments in Ginnie mortgage-backed securities pools and smaller payouts to investors. VA refi volume fell 42.7 percent from the previous quarter (see chart on page 2), contributing significantly to the 32.2 percent decline in total VA loan securitization during the period. John Getchis, senior vice president at Ginnie Mae, said he does not think the churning trend will continue because the ...