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Ocwen faces federal charges for alleged shady dealings, lender could be doomed

Ocwen has come under fire for their allegedly shady dealings with customers and now California has demanded $2.5 million as an investigation begins.

ocwen

Ocwen is a subprime loan servicer with heavy ties to Goldman-Sachs. Whispers are circulating stating Ocwen is a mere six to twelve months from filing bankruptcy, due to the overabundance of creditors seeking monetary judgments against them for (allegedly) violating various service terms. The biggest of these: utilizing manufactured assignments to prove standing.

There is also the possibility that Ocwen will face with criminal charges as well. Dozens of employees and officers within the organization could also be facing similar charges. Ocwen’s stock has plummeted over 36% in recent days; definitely not a good sign considering what’s at stake for them if California regulators proceed with plans to suspend Ocwen’s operating license in their state.

Where federal charges will lead

As Ocwen has also been accused of producing questionable documents that are then being recorded in county clerk’s offices nationwide, the potential for nationwide criminal charges is almost inevitable. Civil charges are less likely because the federal government is unwilling to prosecute. This could have something to do with the fact that the former United States Attorney General and Covington & Burling partner, Eric Holder was given a $77 million-a-year post with JPMorgan Chase as “Compliance Officer.” When such lucrative job transfers happen, justice seems to be the last thing on the agenda.

In a more recent update, the California Department of Business Oversight (DBO) announced a $2.5 million settlement today with Ocwen Loan Servicing, LLC over the firm’s failure for more than a year to provide loan information needed by the DBO to assess Ocwen’s compliance with state mortgage lending laws. DBO Commissioner Jan Lynn Owen states, “the Department is committed to supporting a fair and secure financial services marketplace for all California consumers. This settlement allows us to move forward and ensure that Ocwen is meeting its obligations under the law.”

Next steps in the process

Under the consent order agreement, the DBO will select an independent, third-party auditor, paid for by Ocwen, whose duties will include ensuring Ocwen provides the DBO all the information it has requested from loan files. Ocwen also will pay $2.5 million in penalties and cover the DBO’s administrative costs associated with the case.

This settlement will also prohibit Ocwen from taking on any new California customers until the DBO determines the firm can fully respond in a timely manner to future requests for information, and the DBO will drop its effort to suspend Ocwen’s license to operate in California. However, the DBO retains the ability to pursue an enforcement action against Ocwen should the examination of the loan files uncover substantive violations of laws designed to protect mortgage loan consumers.

Only time will tell whether additional charges will be lodged again Ocwen and if their settlement will be the end of their trouble in California, or merely the beginning.

Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.

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