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State of California demands compliance from Home Loan lender (Includes interview)

Under a settlement on Jan. 23 an enforcement action was brought against Ocwen by The California Department of Business Oversight.
The DBO wanted to get word out that it is accepting applications from firms or individuals interested in serving as third-party auditor for Ocwen Loan Servicing, LLC. The auditor position was created as part of the settlement agreement and officials are confident Ocwen will cooperate.

“The Department is committed to supporting a fair and secure financial services marketplace for all California consumers,” said DBO Commissioner Jan Lynn Owen. “This settlement allows us to move forward and ensure that Ocwen is meeting its obligations under the law.”

The third-party auditor will examine loan files to determine Ocwen’s compliance with state and federal laws and regulations. This includes the California Residential Mortgage Lending Act and the state’s 2012 Homeowner Bill of Rights. The DBO retains full authority to bring an enforcement action if the auditor’s review finds violations of laws or regulations.

Speaking on behalf of the DBO, media rep Tom Dresslar said, “we approached Ocwen a dozen times or more and at each attempt, Ocwen failed to provide what was required.”

As to the reasons why Ocwen is reluctant, has not been made known. But California is not the only state in which Ocwen has failed in its business compliance requirements as the nation’s fourth largest service provider of mortgage loans.
The Washington Post reported back in 2013 that, Maryland’s State Attorney General alleged that the company failed to apply borrowers’ payments to their loans. Ocwen failed to maintain accurate account statements, charged unauthorized fees and provided false or misleading information to borrowers. A settlement agreement was reached in that case with the State of Maryland for 88 million.

According to Banking and Finance Law Daily, Ocwen must pay $2.5 million in penalties within 10 days (of the settlement) and cover the California DBO’s administrative costs associated with the case. And, as the daily report from Wolters Kluwer noted, Ocwen is also prohibited from taking on any new California customers until the California DBO determines the firm will be able to respond in a timely manner to future requests for information.

The LA Times reported on January 23 that Ocwen stock shares fell. “Run-ins with state and federal regulators over botched handling of troubled borrowers and foreclosures have sent Ocwen’s stock reeling. And its many woes are being compounded by angry and bloodthirsty investors.” That report also noted that some investors had taken steps to file a law suit against the Atlanta-based company.

Representatives for Ocwen did not respond to media inquiry for comment. Only, that its Investor Services Department received the inquiry and sent back an automated reply via email.

“These regulatory exams are a routine procedure,” said Dresslar. Yet for more than a year Ocwen has stalled, failing to disclose info that is mandatory by law. As far back as October, the DBO made it clear Ocwen would have its business license revoked. Yet, Ocwen still failed to comply with requested information. “Enough was enough,” he said.

The auditor (when selected) also will conduct a review of Ocwen’s loan servicing procedures and practices to detect any deficiencies that affect the firm’s ability to deal with its customers in accordance with the law. Under the settlement, Ocwen must adopt an action plan – approved by the DBO – to correct any deficiencies. The auditor will oversee Ocwen’s implementation of the plan. Ocwen will pay for the third-party auditor.

Dresser noted that while the audit has no time frame set to it as of yet, the deadline for applications received by third-party auditors for consideration is February 20.

For more information visit the California Department of Business Oversight web site.

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