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Feds sue mortgage company over alleged illegal foreclosures

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Loan-servicing company crashes after regulator says big errors cost borrowers their homes

State and federal agencies on Thursday filed lawsuits against Ocwen Financial Corp., accusing the West Palm Beach-based company and its subsidiaries of repeated mortgage-servicing abuses.

The actions by the federal and state governments are the latest black eye for Ocwen, which grew to become one of the nation's largest nonbank mortgage servicing firms after the housing crash but has been swamped by regulatory problems and consumer complaints.

"Ocwen failed to properly recognize individuals as heirs, and thereby denied assistance to help avoid foreclosure", the CFPB claims.

Other times, Ocwen "failed to appropriately credit payments made by numerous borrowers", the agency claims.

— Mismanaged escrow accounts for more than 75 percent of the 1.4 million loans it services.

A department spokeswoman said that Ocwen handles just over 45,000 loans in MI.

"Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes", bureau Director Richard Cordray said in a statement.

It said the company would go after borrowers long before verifying whether the debt was valid, allegedly foreclosed illegally on at least 1,000 homeowners, and charged borrowers for add-on products without their consent.

Ocwen allegedly filed illegal foreclosures, collected excessive fees, mishandled loan modifications and misapplied mortgage payments, according to Florida's offices of the Attorney General and Financial Regulation.

A spokesman for Ocwen said a statement was forthcoming. "Borrowers have no say over who services their mortgage, so the Bureau will remain vigilant to ensure they get fair treatment".

At year-end 2016, Ocwen serviced almost 1.4 million loans with a total unpaid balance of $209 billion, according to CFPB.

In response to these filings, an Ocwen spokesperson said "We have just received various orders from state mortgage regulators, and are in the process of reviewing them in detail".

If you are an Ocwen shareholder and are interested in learning more about the investigation or your legal rights and remedies, please contact Jim Baker ([email protected]) at 619-814-4471. According to the lawsuit, Ocwen's head of services called the company's technology "an absolute train wreck".

After receiving her May mortgage statement, the borrower reported that Ocwen mistakenly placed her principal and interest payment into a suspense account.

Numerous errors, the CFPB says, came about through Ocwen's flawed proprietary servicing system that the company's servicing head once referred to as a "train wreck".

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