PORTLAND, Maine — Maine has joined 20 other states in prohibiting Ocwen Loan Servicing from adding any more Maine mortgages to the portfolio it manages.
Maine’s Bureau of Consumer Credit Protection this week announced it took part in a multistate cease-and-desist order against Ocwen, which was coordinated with a lawsuit from the U.S. Consumer Financial Protection Bureau.
The agency said Ocwen services about 1.5 million mortgages nationwide, and officials in Maine said the lender has been the subject of 55 complaints since late 2012, in municipalities spanning from Corinna to Kennebunk.
The regulators allege Ocwen mismanaged escrow accounts set aside to pay taxes and insurance on certain properties. The cease-and-desist order from Maine regulators states Ocwen declined to audit all of its escrow accounts.
“People have no choice of the mortgage servicer that handles their loan, and yet the servicer’s misconduct can cause families to lose their homes,” Lauren Saunders, associate director of the National Consumer Law Center, said in a prepared statement. “That is why vigilance by the CFPB and state regulators is so important to send a message to financial service providers that misconduct will not go unpunished.”
The lawsuit and multistate cease and desist orders have frozen Ocwen’s acquisitions of mortgages originated in many states and entirely stops its business in Massachusetts, according to Housingwire.
In a statement last month, West Palm Beach, Florida-based Ocwen vowed to defend itself against the CFPB’s “unfounded claims,” saying it cooperated fully with the bureau’s inquiries and that the regulator was overreaching.
“Ocwen strongly disputes the CFPB’s claim that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm,” the company said.
Ocwen is one of the country’s largest nonbank mortgage servicers, servicing nearly 1.4 million loans.
It added that many of the issues were addressed in its 2013 settlement with the CFPB and that the allegations in the new complaint represent “only a small percentage of Ocwen’s 1.3 million customers.”
The bureau said some of Ocwen’s alleged violations included illegally foreclosing on homeowners, failing to credit borrowers’ payments, botching escrow accounts, servicing loans using error-riddled information and deceptively signing up and charging borrowers for add-on products.
Many of the errors, the CFPB says, came about through Ocwen’s flawed proprietary servicing system known as REALServicing, which the company’s servicing head once referred to as a “train wreck.”
In one case, a borrower with a mortgage modification started having her payments rejected. She later learned the system was off by a few cents in how it calculated her new modified monthly payment, misapplied her payments to the month before and caused her to receive delinquency notices.
“It is very embarrassing to come home and see a notice on my door of an impending foreclosure especially when I have made and continue to make my monthly mortgage payments,” it quotes the borrower as saying.
Reuters contributed to this report.