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House in a mousetrap
On Dec. 19, 2013, in news that went largely unnoticed outside of financial and real estate blogs, a company called Ocwen Loan Servicing LLC agreed to a $2.2 billion consent order (aka settlement) of nationwide litigation brought by the Consumer Finance Protection Bureau (CFPB) and the Attorneys General of 49 states (Oklahoma being the lone hold-out) and the District of Columbia to resolve countless complaints about Ocwen's loan servicing practices. This settlement followed the filing of litigation by those parties just one day before in order to create a legal vehicle to support the previously-negotiated settlement. In the settlement, Ocwen's civil liability for predatory (in this author's opinion) mortgage servicing practices going back to 2009 (4 years prior to the settlement) was fully and finally resolved, subject to court approval.  

There are a plethora of articles to link celebrating the Ocwen settlement and how much each state will supposedly receive. But in this author's opinion, I can't understand why anyone other than the CEO of Ocwen and its stockholders would celebrate. This settlement is chump change, if you know anything at all about Ocwen and its lengthy history preying upon low-income and credit-impaired homeowners throughout the United States.

Yet despite its history, Ocwen is now the largest non-bank mortgage servicer in the United States. And, most frighteningly if you owe a mortgage, Ocwen is poised to grow even bigger. Given this, the Ocwen settlement, despite the many celebratory stories, is a sad testament to this Main Street reality: The worse a financial actor has been (even if it remains so) the less likely that it will ever face any meaningful consequence for its behavior. Instead, it will become more powerful, and influential, and basically too big to fail.

Follow me below the fold for a brief discussion of the settlement and just a snippet of the convoluted, lengthy history of Ocwen in all its various disguises. A history that makes crystal clear that this particular bad actor just bought a rosy financial future for itself and that this settlement is just a whimper, not a bang, of consumer rights enforcement.

How many Americans (even Kossacks) have ever heard of Ocwen Loan Servicing?

What about Ocwen Financial?

Perhaps you have heard of Ocwen Technology Xchange?

What about Ocwen Realty Advisors?

Or, even, Ocwen Federal Bank FSB?

Perhaps not that many.

Maybe you have heard instead about Altisource Portfolio Solutions? Litton Loan Servicing or Saxon Mortgage Services? How about Select Portfolio Servicing (SPS) formerly known as Fairbanks Capital? Maybe H&R Block Mortgage Company aka Option One later known as American Home Mortgage Servicing (AHMSI) later known as Homeward Residential? What about Ally Bank/GMAC aka Residential Capital LLC? How about OneWest?

No? That's okay. Comparatively few people have unless you follow the subject of predatory underwriting, predatory lending and predatory mortgage servicing (as I have since the 1990s.)

Yet all of these companies are connected to, previously and, more frighteningly, currently (since Ocwen is on a subprime buying spree), Ocwen Loan Servicing.

Unfortunately, most people who have some familiarity with some or all of these names rue the day they first heard the name "Ocwen". (Just to show you how "cute" its CEO David Erbey is, Ocwen means "NewCo," spelled backwards.) Because too often direct involvement with Ocwen, unless you are a bank or an investor trying to make a handsome profit, represented the beginning of a nightmare as it related to your home.

There are precious few actors in the mortgage servicing (previously, mortgage lending) world that can match Ocwen's abysmal track record as it relates to homeowners. Ocwen's story of bad behavior when it comes to mortgages is (sadly) not unique. It is an object lesson in how a predator can not only evade legal and financial consequences but get richer doing it to applause. Since the 1990's Ocwen has been associated over and over again with the worst of the worst of predatory lending and mortgage servicing, both when it was itself a bank and subsequent (after being effectively run out of the business of lending by state government scrutiny) now that it focuses only on mortgage servicing.  There is simply too much to write about in a single diary.  Those who really want to get a flavor of Ocwen, however, can start by going to the Government Printing Office's list of 1300 federal court decisions involving Ocwen

Or, if you want to hear the voices of Main Street on the subject of Ocwen, just Google "Ocwen Complaints".

Today, the Better Business Bureau (not exactly known for its aggressive assistance to consumers) has given Ocwen the stellar rating of "F" in its own home state of Florida. Search other states, and some of the other names I've listed above, you will find the same thing. Over and over again.

There is a good reason for this: Ocwen's long-term success at making the lives of homeowners miserable is so thorough, so comprehensive, and so unpunished that some Americans have reached the point of fruitless desperation, and publicly written to President Obama pleading for help, or at least a serious investigation into Ocwen's practices.

To give you a sense of the scope of Ocwen's bad conduct in the 1990's and up to the mid 2000's, in 2004 the Judicial Panel on Multidistrict Litigation (MDL) for the federal courts granted Ocwen's motion to consolidate the federal class actions pending against it into a single action, In re Ocwen Federal Bank FSB Mortgage Servicing Litigation located in the Northern District of Illinois. As the Panel noted in deciding to consolidate 9 class actions (from Illinois, Connecticut, and California) that had been filed at that point:

All actions share factual questions arising out of allegations that Ocwen and/or other defendants engaged in unfair loan servicing and/or debt collection practices i) in violation of the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Truth-in-Lending Act, the Fair Credit Billing Act, the Racketeer Influenced and Corrupt Organizations Act and/or state consumer protection/unfair trade practices statutes, as well as ii) based upon various common law theories of liability. . .


Given the geographic dispersal of constituent actions and potential tag-along actions, no district stands out as the focal point for this nationwide litigation.
At that time Ocwen was NOT just a servicer--it was also a direct lender (a lender that, ironically, transferred much of its servicing to a then-separate company called Litton Loan Servicing--which Ocwen purchased from Goldman Sachs in 2011.

Ocwen's success in getting MDL status for litigation brought against it began a tortuous path of litigation that resulted in 67 individual and class actions filed before 2007 against Ocwen in federal districts nationwide being consolidated into the MDL. That path did not end until 2011, when Ocwen finally settled the litigation.  The ultimate settlement was underwhelming, to say the least. (It certainly did not appear to reflect the thinking of the MDL judge who, in 2006, denied Ocwen summary judgment on the state-based consumer fraud and tort claims asserted through the MDL.) As described in Ocwen's own words in 2011:

Ocwen’s portion of the proposed settlement payment is $5,163 plus certain other non-cash consideration and administrative costs.
And there was much rejoicing:
Well here is some more recent news - a client of mine expecting $1300 plus got a check for $52!
Fortunately, not every homeowner was governed by the MDL. In some cases, homeowners abandoned their federal claims entirely in an effort to avoid being stuck in federal court. In others, smart plaintiffs' lawyers knew that federal courts generally favor large litigants such as Ocwen and successfully fought Ocwen's motions to remove their cases from state court and include them in the MDL. Some of these cases ultimately went to trial and, surprise surprise surprise, some juries that evaluated those cases were left with a very different impression of Ocwen's behavior than the federal district and appellate courts usually have had (the majority of which have granted or upheld summary judgment and/or 12(b)(6) motions to dismiss in Ocwen's favor before a trial).

Perhaps it is because in many state cases, like Sealy v. Ocwen FSB, Main Street judges and juries actually were treated to evidence that all was not right in Denmark. Some of this evidence even confirmed what many of us dealing with predatory lending and servicing back then always knew (we were, of course, routinely pooh-poohed by the so-called serious people, including courts and many so-called liberals, none of who could accept that a lender might have an incentive NOT to avoid foreclosing on a loan).

As this testimony by a former Ocwen loan collector confirmed, during the real estate bubble, at least one goal of the mortgage servicing industry was to force homeowners with significant equity remaining in their home into foreclosure, allowing the home could be resold at a profit (but only after the servicer had generated thousands of dollars in fees, penalties, inflated costs, and forbearance charges over months of taking the homeowner down the primrose path believing that he or she could save the home). Here's just a snippet of this testimony from Sealy about how Ocwen affirmatively misled borrowers with meaningful home equity about the company's desire for a successful resolution of their mortgage delinquency:

Q. Do you have any information about whether Ocwen would send payments back to customers, reject payments after they requested the payments be sent to them?. . .

A. Yes, we did. Sometimes --

Q. Could you explain that to the jury?

A. Well, the foreclosure department needed a minimum of three payments. If they wanted to send one to us, it was our discretion to take it or send it back. We could put them on foreclosure hold for that one payment and they would send us two more later on or whatever. But we would send it back to them.

We looked in the system and seen there was equity in the home, we would reject the payment and it was in foreclosure anyway and there was not time to put them on a forbearance plan, and we sent it back. Or if we didn't receive the payment, got lost or sent back, that's what we did. . .

Q. So, Mr. Davis, at Ocwen were you allowed to -- were you allowed to modify loans regardless of a servicing agreement's terms?

A. That's correct. If it met the -- how do I say it?

Q. Just "yes" or "no." Were you allowed to?

A. Yes, we were.

Q. In answering Mr. Madole's question, you also said that if there was equity, we would chose not to modify. Can you explain that answer? . . .

(BY MR. HILLIARD) Can you explain to the folks what you meant when you explained to Mr. Madole if there was equity in the house, you would choose not to modify a customer's loan?

A. That's correct. Because if there was equity, and this is based upon all the LRCs, and there's 30 of us, and we would get a bump if it went to foreclosure. We didn't have to do modification. If they didn't come up with payments to put them on forbearance, we would not do that either. We would let it go to foreclosure, get a buyer for the home. . .

Q. (BY MR. HILLIARD) Are you aware of a policy in telling customers about forbearance?

A. Yes.

Q. Could you explain to the jury what the policy was in regards to representing forbearance as a possibility and foreclosure?

A. Again, our system allowed us to go in there and plug in the numbers for percentages of the house, what the loan to value was, what Ocwen got for the home, or if it was even being serviced by another lender. It was up to us. And we did it to let it go to foreclosure or come up with the money we were asking for, including attorneys' fees and costs for our bumps, extra money in our pocket. . .

Q. (BY MR. HILLIARD) Are you familiar with whether or not there was a policy at Ocwen to make representations that forbearance was a possibility while unbeknownst to the customer proceeding to foreclosure?. . .

A. (CONTINUING) Yes.

Q. (BY MR. HILLIARD) There was a policy?

A. Yes.

Reading the pleadings filed in just one of the MDL cases, Hanson et. al v. Ocwen FSB et al., gives you a sense of the type of conduct that Ocwen engaged in with its borrowers.  [Important ego-based personal note:  Dear Kossack lawyers reading this: I do not endorse either Kweku Hanson, who ended up being disbarred for some scurrilous shit in 2007, or the complaint in the Hanson v. Ocwen case as a model of pleading; I link to it because his story about his battle with Ocwen is reflective of so many others.]

Indeed, sometimes Ocwen's conduct as it relates to homeowners was truly bottom of the barrel, such as when it was discovered in 2009 that Ocwen was levying improper fees and threatening foreclosure against borrowers while they were in bankruptcy to the point where a judge finally got sick of it and bought out the Ugly Stick.  Or even earlier, in 2005, when it was forced to stop fucking with homeowners who had lost everything in Katrina by charging them prepayment penalties for using insurance proceeds to pay off their mortgages, thanks to the little-poor-people's-engine-that-could: ACORN.

Just to put things in perspective, the MDL was just one of many cases.  Indeed, in just the past 10 years (2003 to 2013, the limit of docket searches available on the public Internet), the various faces of Ocwen—Ocwen Financial, Ocwen FSB (before its voluntary dissolution in 2005) and/or Ocwen Loan Servicing—has been sued in federal courts 2,332 times. This figure does not include the thousands-more cases brought in each state that were never litigated in, nor removed to, federal court.  

But that's not all.  In addition to the thousands of state and federal court lawsuits involving Ocwen and its origination and servicing practices, most of which Ocwen has won, Ocwen has been repeatedly called on the carpet by the federal government in the past 2 decades. Each time, it has been permitted to wiggle out of any serious consequence and at least several times has been rewarded with government contracts.

For example, in 1999 (after the serious problems with its loan origination and its management of its deposit accounts became undeniable) Ocwen was the recipient of a comparatively rare gift: a threat of supervision by the Office of Thrift Supervision (OTS). Fast forward several years. What you find is that, in exchange for Ocwen agreeing to relinquish its status as a bank (a move that in its annual reports Ocwen stated was consistent with its new business strategy of acquiring assets with low capital investment and moving away from capital-intensive investments, such as making mortgage loans), OTS ultimately agreed to settle in 2004. As part of that Supervision Agreement, in addition to giving up lending (which Ocwen was going to do anyway) Ocwen promised to change its ways and stop being a predatory mortgage servicer.

That was a decade ago.

Were the OTS actions against Ocwen taken more than a decade ago the only government effort to reign in an undisputed predator, one could perhaps make excuses for why the CFPB was willing to settle this most recent case. But OTS is NOT the only federal regulator to have had issues with Ocwen and its so-far-quite successful business strategy.

So, in 2011, the Federal Trade Commission (FTC) opened its second investigation. In the early 2003 Ocwen managed to land a lucrative contract servicing mortgages and REO property for the Veterans' Administration. It only took the VA a little while to figure out that it was dealing with a shady financial actor. In 2005, Ocwen ended up paying $1.5 billion in penalties to the VA for nonperformance on its contract. The VA cancelled its REO contract with Ocwen in 2006, and allowed its other contract to expire in 2008 but not before the GAO issued a scathing report about Ocwen with the VA in 2007.  (The VA then outsourced to another famous predator, Countrywide, but that is a different story for a different time.)

Alas, memories are short at the federal government.  Since, after Ocwen supposedly had "changed its ways," the VA hired Ocwen AGAIN for REO property management services in 2009. (This resulted in living proof of that well-known saying "Fool me once shame on you; fool me twice shame on me": several of Ocwen's employees and its captive home improvement contractors were recently convicted of wire fraud and other crimes in 3 separate cases.  

(For those who don't click links, before you conclude this was just a couple of bad apples who happened to roll with Ocwen this one time, this criminal case was only the most recent):

This is the third case involving properties managed by Ocwen under contract with the VA. On Dec. 3, 2010, Benjamin K. Graves, also a former Ocwen employee, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the VA contract.  On Jan. 25, 2012, Joshua R. Nusbaum, another former Ocwen employee, and Andrew J. Nusbaum, a former Ocwen contractor, pleaded guilty in U.S. District Court in Orlando, Fla., to wire fraud in connection with the same VA contract.  Piana pleaded guilty to the same counts as Carbonell and Hurst on July 16, 2013, in U.S. District Court in Orlando, Fla.  Piana was sentenced on Sept. 30, 2013, to serve 24 months in prison and to pay $147,285 in restitution to the VA.
And Freddie Mac, one of the GSE's, trusted Ocwen enough despite the never-ending litigation and complaints, to contract it to service a portion of its loan portfolio.

Not be left out, several states have also threatened or engaged in enforcement actions against Ocwen since 2000, most notably New York. In 2011, concerned about Ocwen's "same old same old" practices in mortgage servicing, entered into what the state's oversight arm, the Department of Financial Services thought was a binding "Agreement to Servicing Practices" in which Ocwen promised to (AGAIN) be a good egg when it came to mortgage servicing (including as it related to foreclosures) in exchange for the state not dropping the hammer under its fairly stringent banking laws.  So much for promises: less a year later, New York ultimately insisted on a stipulated court order for appointment of a "compliance monitor" effectively compelling Ocwen to do what it said it would, based on its noncompliance pretty much across-the-board with the earlier 2011 agreement.

With a business track record like Ocwen's, were this a rational business world its name would have been consigned to the dust bin of history long before the subprime mortgage crisis began. Indeed, Ocwen actually may have actually come close to folding in 2008, where Ocwen was contemplating letting itself get bought out for just $7/share.

But it didn't.

Instead, today Ocwen is trading on the NYSE at over $55/share, with market capitalization at $7.5 billion. But that's not all. Ocwen also has quite a few well-known related companies that are also publicly traded, with market capitalization of $14 billion, all combined. In addition, some of Ocwen's greatest assets today include Altisource (the company that owns the lovely computer program that uses algorithms to generate canned customer service responses down there in India when an Ocwen hostage calls yet again to raise hell about their mortgage servicing) even though on paper at least, Ocwen and Altisource are not related at all.  Altisource alone brings another $3.7 billion to the party in terms of market capitalization. By the time you finish drawing all the lines, Ocwen and all the spider web lines that flow from or through Ocwen approach $20B of value.

That love tap by the CFPB and the states of $2.1 billion liability (on paper--see below) that Ocwen just received doesn't seem to hurt quite as much, when you put it back in context, now does it?

One has to ask how on earth, if Ocwen was known as a predatory mortgage servicer long before the CFPB was created, long before the bubble burst and long the country was roiled by millions and millions of foreclosures and threatened foreclosures, it was ever allowed to do business again. Yet it has been.

Today, Ocwen is bigger and badder than ever. Its success appears to flow from a combination of an admittedly entrepreneurial (albeit greedy and and cynical as hell IMO about the American Dream) CEO with a long-term view of business and the help of the government, including the courts that have long-failed to drop the hammer on Ocwen in its various forms except in one-off ways.
Notably, there has been no ongoing, comprehensive investigation into Ocwen and all of the companies related to it thanks through Bill Erbey's involvement with each despite the formalities of separate corporate existence.  

This has left Ocwen still riding high in the financial saddle--with its future so bright, it's gotta wear shades. Indeed, things are so rosy that Ocwen has contemplated getting back into lending, a business it basically got run out of by the OTS in 2005 when it voluntarily shuttered Ocwen Federal Bank FSB.  But spend as much time learning about Ocwen as I have since the late 1990's, and it becomes clear that every single effort to reign Ocwen in is merely a minor cost of continuing doing its business in the same predatory (as it relates to homeowners, anyway) manner that it has for the last 15 years.

Certainly, the CFPB settlement isn't going to hurt. Hell, it won't even phase the man in charge all that much. Bill Erbey, the evil genius behind Ocwen since its creation, had as of this year made $2.8 billion personally from Ocwen.  

In other words: Erbey could have written a personal check to cover the inflated face value of the settlement in full and still had $700,000,000 in change left over. (In terms of actual expense, I suspect that the $135K won't even make a dent in Erbey's back-up checkbook.) The company itself would not have had to pay a dime in that scenario (and doesn't have to pay most of the CFPB settlement either, since it will pass through the expenses to the "true owners" of all these loans that are promised to be modified.)

Same as it ever was.

The Ocwen story is a depressing one, for those who (like me) believe that the failure to punish those most responsible for the crisis has merely enabled further wrongdoing by those who have operated with impunity not just on behalf of the big banks who at one time or another all had involvement with Ocwen, but first and foremost itself. Largely under the radar, unless you like me have taken interest in Ocwen specifically and have followed it throughout the decades. Fortunately, Ocwen's aggressive growth means that its name is finally coming above the mainstream radar. Unfortunately, it's name is being celebrated by the titans of industry for having grown so big, so fast and so far, despite all the "regulatory headaches" it has had to endure.

How has it been allowed to get away with so much, for so long? Well, it isn't just that Ocwen has benefitted from having done so much wrong as it relates to servicing loans that its largest litigation threats keep getting consolidated into federal court actions (where Ocwen has reaped the benefit of the combination of white shoe counsel, low-income homeowner-skeptical judges and laws that already make it very hard to get relief from a mortgage lender or servicer for their bad acts, such that most cases against these types of defendants get dismissed out of hand, or ultimately settled for pennies.) It isn't just that Ocwen readily changes its skin and its public face, creating new shell companies to transfer old business assets to, ceasing to use business names once they become too recognized for shadiness, stuff like that.

(Frankly, it also doesn't help that even so-called progressives buy, and repeat, hook, line and sinker, the convenient lie that the mortgage crisis was a result of folks buying "more home than they could afford." Spend some time looking at the actual lawsuits, the complaints, and notice that the same allegations (missing payments, false accounting, misrepresentations regarding forbearance and modifications) occur over and over and OVER again in cases against Ocwen and many many other companies where folks ultimately lost their homes, then ask yourself whether you still believe that lie.)

It is also because Ocwen is quite happy to clean up its act temporarily when the heat gets to be too much. Usually, it has been just long enough to gain allies amongst those most committed to preserving homes. It effectively co-opts its detractors through this on-again, off-again, compliance. A good example is Ocwen's decision, in 2011 when regulatory scrutiny was again heating up, to fashion itself as the white knight everyone had been waiting for in two areas: permanent loan modifications under HAMP, and launching a new, a program to write down mortgage principal on some of its loans, launching a new, completely discretionary loan-by-loan mind you, program called the Shared Appreciation Modification Program (SAM.)

These programs sound great - until you realize that (a) even though Ocwen was responsible for nearly 1/2 of all permanent loan modifications under HAMP in 2011, this benefitted a whopping 1,700 people, and had the potential to affect only 3% of the entire mortgage servicing market, so we're not talking about a major investment by Ocwen; and (b) Ocwen and its investors not only face no greater risk (since 12% of folks who modified through SAM re-defaulted anyway, turning all of the equity in their homes over to Ocwen in the process) but also poised to make a handsome profit when they collect their required 25% of any profits on sale/refinance now that home values are again bubbling, including in those markets previously devastated by the housing/mortgage crisis and (c) complaints and lawsuits still abound about Ocwen's treatment of borrowers --and fraud on the government, sometimes.

Ocwen has also managed to succeed because it is a master of PR. Even as it was getting sued over and over again for borrower abuse, and threatened with regulatory consequence, Ocwen's PR machine has projected a public face of respectability and community friendliness. It has succeeded in that to the point where it has been nominated for business awards for being a "socially responsible business", even having been given the key to the City of West Palm Beach, where Ocwen is headquartered.

It also appears to have adopted a strategy of finding allies with credibility in the consumer markets to undermine what otherwise has been since 2000 or so a steady drumbeat of outrage about its behavior. One need look no further for an example of this than Ocwen's efforts to build relationships with nonprofit organizations that had loud and proud histories (or at least, used to) of being the most relentless and aggressive when it came to protecting homeowners from mortgage servicing and foreclosure misconduct.

One is a well-known-in-the industry community preservation nonprofit called ESOP. ESOP was founded by an elder in Cleveland, Ohio, in 1993 as an organization called the East Side Organizing Project. Beginning in the late 1990s, as the underhanded behavior of mortgage lenders and servicers in low income, largely historically Black, communities became increasingly apparent and severe, ESOP shifted its focus to combating predatory lending and mortgage servicing and providing foreclosure defense advice to distressed homeowners. In 2008, however, ESOP changed. It rebranded as "Empowering and Strengthening Ohio's People" went, almost overnight (as nonprofits go, anyhow) from a 3-man shop to a 10-office statewide nonprofit. (2008 was also the last year that any "milestones" are highlighted by ESOP on its own website; go figure.) This transformation of a grassroots foreclosure prevention and defense organization to a major nonprofit player came just a few years after ESOP negotiated a "partnership" with Ocwen to "help homeowners"—a "partnership" initiated not by ESOP, but by Ocwen itself during the tenure of its executive director since 1999, Mark Seifert. Today, Mark Seifert—the man who was in charge of ESOP through its transformation —is Vice President, community relations housing authority at ... you guessed it ... Ocwen Financial Corporation.

Ocwen has also become a financial supporter of a number of other nonprofits who have enjoyed serious credibility because they have historically been neighborhood activists fighting for communities and homeowners.  It has reaped the PR benefits of that investment, and definitely makes sure that we know that its supported nonprofits just love Ocwen for being such a great company to work with when it comes to homeowners.

Not content with merely becoming a benefactor to otherwise legitimate nonprofits and using their brand to untarnish its own, a few years ago Ocwen went so far as to create, and hide behind, an "alliance" of those who say they only want to help homeowners: an organization called "Hope Now." (You gotta love branding; this one is right up there with Bush's "Clean Skies Initiative".) Hope Now is an admittedly mortgage-industry created "alliance" (created by Ocwen) whose mission is, supposedly, to keep people in their homes and avoiding foreclosure. Hope Now is not a nonprofit. While today, there are some nonprofits of national statute—most notably, Catholic Charities and La Raza—that call themselves part of the "Hope Now" alliance, at its founding it was clear that Hope Now was created by some of the absolute worst of the predatory lending/servicing industry (if you have a few days, Google the name of each and every one of the mortgage companies listed—but bring a punching bag because that's how angry you will get). And, until earlier this year, Hope Now was headed up by a woman, Faith Schwartz, whose mortgage industry bona fides far predated Hope Now's creation in 2007 and whose willingness to do PR for Ocwen was well known.

Why NACA is not a member of "Hope Now"
(Some important nonprofits that are not part of the Hope Now Alliance are two of the most effective consumer-side nonprofits working to save people's homes for the last decade: The Neighborhood Assistance Community Association (NACA) and the moral successor to ACORN (previously, the scourge of the predatory lending industry in general and at one time Ocwen in particular), Affordable Housing Centers of America. (And folks thought the only reason Republicans cared about ACORN was because of voting registration......RIP ACORN.)

Just in case you think that what Ocwen does, has done, and will no doubt to continue to do is limited to its mortgage customers, think again. It seems that Ocwen can't even stay on the right side of labor and employment law having just laid off 800 folks without bothering to comply with WARN. (Having the vast majority of your employees in India and Uruguay call centers makes one forget, I guess, that it technically still operates in America - but maybe not.)

There are a couple of "silver linings" in the Ocwen settlement, I guess: a) Ocwen has waived its right to assert immunity from prosecution as it relates to any criminal prosecutions and (b) securities/investor claims are not included in this settlement (eventually, I will hopefully get to write the diary I've not had a chance to about the fact that to date the ONLY meaningful relief the law has provided as it relates to the mortgage crisis has not been to homeowners, but to investors playing with their spare change who—despite investing previously been acknowledged as carrying inherent risk—lost some of their money.

Combine this utter failure of the courts and regulators to drop the hammer on a known bad actor like Ocwen with the reality that, today, the traditional mortgage lenders—Bank of America, OneWest, Wells Fargo, Citibank, Deutsche Bank, you name it—are all trying to get out of mortgage servicing after loans are made (which would allow them to reap the full benefit of the CFPB's decision to provide a complete safe-harbor from litigation exposure for predatory lending tactics so long as the mortgage is deemed "qualified," while simultaneously creating a definition of "qualified mortgage" that covers basically all new residential mortgages as long as the paperwork "looks okay.") When they look for a servicing company, who is going to be there for them, as the largest, and most "innovative"?

You already know the answer—and thus the not-unlikely future. (There is another company, Nationstar Mortgage Holdings, that is in fierce competition with Ocwen and thus an alternative—but not a very good one.) IMO, the problem has been the direct result of misdirection and a lack of understanding about how and why the foreclosure crisis really happened. So, while public ire has been (not without reason) focused on sending someone, ANYONE in authority at JP Morgan Chase and Citibank and Wells Fargo and all the others to jail for their role in the "subprime mortgage crisis," few have actually paid any attention to the most direct players, the ones whose predatory servicing conduct most directly forced millions of people whose homes could have been saved with reasonable forbearance and/or loan modification agreements.  

Certainly, almost nobody has been paying attention to Ocwen, and its name is close to, if not at the top of, the list of the worst.

This is why I feel that despite all the celebration, the CFPB settlement with an unrepentant actor like Ocwen is not even going to slow it down. I say this even as I admit that the settlement is probably the best that government could have gotten. That is the saddest part about it all. We're not talking about settlement with a company that made a few mistakes.  When we're talking about Ocwen, we're talking about a predator. As Richard Cordray noted when announcing the consent deal:

We believe that Ocwen violated federal consumer financial laws at every stage of the mortgage servicing process.
This settlement resolves just four years (from 2009-2013) of complaints about abusive practices that Ocwen promises that it has, or will, clean up the edges of.  Promises again..  For $2.2 billion--on paper, at least:
Speaking of lawsuits, yesterday Ocwen announced that it had entered into an agreement with the Consumer Finance Protection Board (CFPB) and other regulators related to its servicing practices - or perhaps pertaining more to the practices of companies Ocwen has acquired. Ocwen is required to make a cash payment of $127.3 million, which includes a payment for administrative expenses, to a consumer relief fund. The cash will be distributed to borrowers by an independent administrator. As a result of indemnification and loss sharing agreements, about half the cost will be shifted to sellers of the servicing portfolios. . . Ocwen also committed to continue its principal forgiveness modification program for delinquent and underwater borrowers in an aggregate amount of $2 billion over the next three years. This will not involve an expense to Ocwen. Since principal reduction modifications are net present value (NPV) positive, they benefit investors as well as Ocwen since re-default risk is reduced and therefore extends the life of the loan which helps offset the impact of the principal reduction. Lastly, Ocwen will also commit to meeting specified servicing guidelines and will be subject to oversight by a national monitor. . .
Stated plainly, Ocwen is getting credit for settling for "2.2 billion" (on paper) when in fact it has to come out of pocket just $127M and a promise to continue a discretionary program, the Shared Appreciation Mortgage that Ocwen was already happily undertaking since 2011.

All while it continues its PR offensive, about what a good guy Ocwen is. With an increasingly able assist from nonprofits formerly known for their fight on behalf of distressed homeowners whose objectivity must now sadly be questioned, given their close financial relationship to Ocwen.

Meanwhile, the never-ending stream of complaints about the nightmare for homeowners that is Ocwen continue unabated. Here's just a couple of Ocwen lawsuits handled in just the last couple of years:

Yarney v. Ocwen Loan Servicing LLC (Illinois)

Bridge v. Ocwen Federal Bank FSB et. al.

Zervos v. Ocwen Loan Servicing LLC et. al.

With Ocwen, same as it ever was.
Despite its PR, pretty much every constituency in the real estate lending and servicing community knows the real deal about Ocwen, and has for a long, long time. (Even groups not known for their consumer-friendly attitudes, such as short-sale brokers (the folks who resell to investors property that has already been lost), and appraisers, who make their money only by keeping originators and lenders happy and therefore tend not to talk out of school.) Consumers certainly have, and you can barely blink on the Internet without running into a complaint about Ocwen.

The trouble has always been, from the perspective of the 99 percent who actually have to pay a mortgage, it's not all that easy to avoid Ocwen, or even know when Ocwen has entered into your life. A borrower cannot control who services his or her mortgage and increasingly, banks are turning their servicing rights to Ocwen. Even if he or she could, as you can tell from the above lists of names Ocwen has operated in connection with/under/as so many companies, and has now acquired so many others, whose names don't look anything like the word "Ocwen" that even if you try to run, you probably cannot hide if you are a borrower.

So, despite it's now $2.1 billion lighter (on paper) "wallet" we have not seen the last of Ocwen. The vastness of the company's current operations, and its unbridled success in avoiding meaningful liability for practices which nobody can argue caused real pain on Main Streets prove that. The CFPB settlement does nothing to stop it; it merely allows Ocwen to make the same promises it has made before, over and over again, only to break them. Thus, the Ocwens of the world which will continue to cause that real pain, if Ocwen's behavior in the 20+ years before the CFPB settlement is any indication of its future.

[Let's be honest: why should Ocwen (or any other business like it) stop? Even adding Ocwen's $2.1 billion (on paper) to the $25 billion (on paper) settlement that the "Big 5" lenders entered into nearly 2 years ago for their predatory mortgage lending and the $13 billion that 13 major mortgage servicers paid just a few months ago to STOP the "independent file review" (independent in name only) they previously agreed to that was absolutely necessary to prove exactly how bad things had been and how many laws and regulations might have been violated, Main Street has managed to recover precious little of the money lost by consumers. No doubt, this is why the same abusive mortgage servicing and foreclosure practices that led to the settlement 2 years ago continue.

Frighteningly, with most of the industry's potential liability for predatory practices now put firmly behind it, we may only be seeing the beginning not just of Ocwen, but every other company like it.  Especially following the omnibus settlements of still-largely-unknown civil liability (with no indication that there will ever be any criminal liability imposed even though it is still technically possible); "ability to repay" mortgage rule as it relates to underwriting; nearly-a-year late implementation of CFPB's "new servicing rules" for mortgage rules that are basically a joke (as proven by CFPB's own "official interpretation" of them); and the particularly frightening protections from predatory lending liability granted last year by CFPB. (Oh, BTW: nothing in Dodd-Frank required such a safe harbor) for "qualified residential mortgages" (conveniently defined such that nearly every mortgage no matter how bad henceforth will be legally deemed "qualified" as long as a lender's files suggest that the lender has done a minimum of due diligence).

Through this settlement, and the surrounding retreat from providing meaningful relief to more than a handful of the 4 million people who lost their homes, and the millions more who suffered through the potential loss thanks to exotic loan products and the "irrational exuberance" of the lending and securities markets fed through questionable lending and predatory servicing practices going all the way back to the 1990's, Ocwen has bought itself out of its (most recent) past yet again. And it has now done something remarkable: it has gone in the court of public opinion from an unquestionably bad actor, predatory lender and servicer that consumers and folks whose mission has been to protect homeowners from predation have complained about for nearly 2 decades and which the government itself has tried to reign in over and over again, to a company where folks are actually engaged in debate about whether it is really not so bad.

In other words, for less than $130K out of pocket, far less than the 2.8 billion it has earned for its CEO alone, Ocwen's settlement pretty much guarantees that it can continue business as usual.  

Same as it ever was.

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Comment Preferences

  •  Tip Jar (82+ / 0-)

    For the hope that eventually someone, somewhere, somehow, will eventually provide a way for Main Street to not only recover some of its losses, but also to put the predators out of business once and for all.

    And especially for folks actually caring about, and fighting for including in terms of assessing candidates for public office, the millions who are still at risk.  Because it hasn't stopped, and looks like it never will--largely because most Americans just didn't give a shit.  As Matt Taibbi highlighted in his seminal editorial piece called "Invasion of the Home Snatchers" in 2010:

    What's sad is that most Americans who have an opinion about the foreclosure crisis don't give a shit about all the fraud involved. They don't care that these mortgages wouldn't have been available in the first place if the banks hadn't found a way to sell oregano as weed to pension funds and insurance companies. They don't care that the Countrywides of the world pushed borrowers who qualified for safer fixed-­income loans into far more dangerous adjustable-rate loans, because their brokers got bigger commissions for doing so. They don't care that in the rush to produce loans, people were sold houses that turned out to have flood damage or worse, and they certainly don't care that people were sold houses with inflated appraisals, which left them almost immediately underwater once housing prices started falling.

    The way the banks tell it, it doesn't matter if they defrauded homeowners and investors and taxpayers alike to get these loans. All that matters is that a bunch of deadbeats aren't paying their fucking bills. "If you didn't pay your mortgage, you shouldn't be in your house — period," is how Walter Todd, portfolio manager at Greenwood Capital Associates, puts it. "People are getting upset about something that's just procedural."

    Jamie Dimon, the CEO of JP Morgan, is even more succinct in dismissing the struggling homeowners that he and the other megabanks scammed before tossing out into the street. "We're not evicting people who deserve to stay in their house," Dimon says.

    •  Well, I do care. The scale of fraud is so massive (10+ / 0-)

      it winds up engendering a kind of disbelief that the perpetrators could have been so brazen, IMO. And then they are able to engage in that ever-popular game of blame-the-victim, especially when that victim is poorer and/or of color.

      Thank you for laying out the case against this particular bad actor so thoroughly. I wish there were a serious and effective remedy possible. I don't think the law provides it. I can only imagine how frustrating it must be to you, as a lawyer, to see the terrible limits of the law in this case--and so many others--to mete out justice. Of course, implementation of the law is critically dependent on those who are entrusted with doing so, usually to our detriment it seems nowadays.

      Impressive and thorough diary. Thank you again for your careful and clear explanations.

      Support Small Business: Shop Kos Katalogue If you'd like to join the Motor City Kossacks, send me a Kosmail.

      by peregrine kate on Sun Jan 05, 2014 at 04:54:40 PM PST

      [ Parent ]

    •  Thank you very very much. (1+ / 0-)
      Recommended by:
      shanikka

      I know how much work can go into preparing a diary like this one.

      And if your mortgage is being administered by a mortgage servicer who is pulling any of the stunts (i.e., fraud)  do whatever you can to refinance with a credit union or local bank that services their own loans and has a good reputation for treating their customers as more than sheep to fleece.

      Our mortgage is with a local credit union and we've never had a problem with them, and they have waived fees several times when a payment was mistakenly made - or arrived - late (back in the day when we paid with a check through the mail).  Not saying every credit union is above board but the record of local credit unions is far superior to any bank with whom I;ve done business.

      And no, I'm not a shill for the credit union industry.  I recommend you look over all you documentation on any mortgage transaction very carefully, and have a lawyer review it if there is any contractual language you do not understand or feel has not been adequately explained to you by the lender, whether a large bank, mortgage lender or credit union.  Just saying my experience has been a good one compared to the regular consumer fraud that many homeowners have to deal with by their lender/mortgage holder/servicer.

      "If you tell the truth, you'll eventually be found out." Mark Twain

      by Steven D on Mon Jan 06, 2014 at 12:59:44 PM PST

      [ Parent ]

  •  Is Oklahoma holding out… (6+ / 0-)

    …because the settlement was too much or too little?

  •  My mortgage was sold to Ocwen in Sept (17+ / 0-)

    by IndyMac/OneWest. I've got a FHA First Time Homebuyers 30-yr fixed rate loan.

    Arggh!

    •  My Advice (30+ / 0-)

      And I speak as someone whose loan was transferred to Ocwen in Spring 2013--if you have any human way to refinance out of your loan to another servicer, do it.  I literally spent 75% of the little that I had in the bank to bring nearly $15K to escrow in September (I refi'd with my credit union, thankfully, after I learned that home values had gone back enough so that I was not underwater) and get the hell out. Because just one interaction with Ocwen after my loan was transferred merely confirmed for me that nothing had changed--except now the phone folks are all scripted to the point of sounding like the Borg, making it impossible to keep your sanity if everything goes even the slightest bit akimbo.)

      If you can't, then make sure to document, document, document, document.  I personally would never make a payment to Ocwen I couldn't prove in at least 2 different ways.

      Good luck!

      •  Only pay with automated bank transfers. (5+ / 0-)
        Recommended by:
        shanikka, rubyr, bear83, Creosote, cotterperson

        No checks.

        No cash.

        No gold.

        No slaves.

      •  And that's part of the problem... (5+ / 0-)

        In the post you wrote:

        With a business track record like Ocwen's, were this a rational business world its name would have been consigned to the dust bin of history long before the subprime mortgage crisis began.
        So...
        if you have any human way to refinance out of your loan to another servicer, do it.
        Servicing is separated from lending, so if you refinance to another lender you can't ensure the new lender won't sell the servicing back to Ocwen (or whichever gang of idiots you're trying to escape). Not objecting to your advice, at least you're trading a 100% chance of dealing with Ocwen for a <100% chance.

        And with respect to their track record...the problem is they don't actually work for the consumers whose mortgages they're servicing, they work for the lender.

        •  I Agree With You (4+ / 0-)

          And should have been clearer about my advice.

          Refinance with a local/small lender or credit union, because at least at present very very few sell their servicing rights.  I actually double-checked my refinance paperwork, because federal law actually requires that a lender provide a disclosure form to you about whether or not it services their loans or sells them, and whether it intends to service your loan.  Had it been anything other than an unconditional "We currently service our loans and intend to service your loan" on my paperwork, I'd have gone to another credit union.

      •  Ocwen is bad news (2+ / 0-)
        Recommended by:
        cotterperson, shanikka

        Our loan was serviced by six companies in three years.

        Six.  And the last one was Ocwen.

        We were terrified that payments would be lost in the transfers.   I had never heard of Ocwen until we received a letter from them.  And a few months later, I began receiving calls that Quicken had taken over the servicing and I better start sending them the payments, soon.

        Home loans have become chips on a casino table.

        Shanikka, this is one of the best diaries on the Ocwen and its sketchy practices.

        In our case, we refinanced with a bank that keeps their loans in house.  I wasn't looking for a better rate- I simply didn't want the terror of possibly losing our house and our credit rating to ineptitude or boiler room stunts.

        Reason, observation, and experience; the holy trinity of science. Robert Green Ingersoll

        by offred on Mon Jan 06, 2014 at 07:15:39 AM PST

        [ Parent ]

        •  That is Why I Re-fi'd Too (0+ / 0-)

          I ended up benefitting with a lower interest rate but I'd have actually paid a little higher interest rate to buy out from under Ocwen's thumb.  No cash out. No consolidation of 1st and 2nd (never had one). The only goal, which I told my credit union up front and reiterated throughout, was to escape this particular servicer.

          I'd helped folks who had dealt with Ocwen as a lender and a servicer.  No way could my blood pressure have taken having to deal with it as a client. One of my three happiest days of 2013 was closing escrow ROFL.

          Love Africa? Love opera? If so, spread the word about this amazing upcoming documentary, The Tenor from Abidjan

          by shanikka on Mon Jan 06, 2014 at 07:37:41 PM PST

          [ Parent ]

  •  My loan was sold to OCWEN (18+ / 0-)

    earlier this year and I was very concerned.  Well, I still am, but, because of my health issues, I asked for a modification.  I just got the mortgage modification last month and it is quite generous.  Now I know why-makes them look good just before this settlement.  Yes, I am still concerned.  No, I can't refinance.  My health problems have left my credit rating and my retirement "savings" in tatters.

    Thanks for this diary.

    The thing about democracy, beloveds, is that it is not neat, orderly, or quiet. It requires a certain relish for confusion. Molly Ivins

    by MufsMom on Sun Jan 05, 2014 at 01:54:36 PM PST

  •  Frighten Existing Mortgagees? (3+ / 0-)
    Recommended by:
    shanikka, Reepicheep, rubyr
    And, most frighteningly if you owe a mortgage, Ocwen is poised to grow even bigger.

    Why would that frighten me if I already have a mortgage I owe? I pay every month on my credit card. If I don't fail to pay, even if Ocwen buys my mortgage from the current lender, what could I be frightened of?

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Sun Jan 05, 2014 at 01:57:02 PM PST

    •  If You Read This Diary (9+ / 0-)

      Thoroughly you will find the answer to your question.

      •  I Did (2+ / 0-)
        Recommended by:
        bear83, shanikka

        I didn't see how any of their scams would harm me with my dated credit card charges records in hand.

        Except for the power that banks evidently have to foreclose anything they want without any reason. That's a scary power nothing should have, though evidently plenty of banks, including some of the remaining too big to fail brand names, have and exercise it.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Sun Jan 05, 2014 at 06:17:48 PM PST

        [ Parent ]

        •  The power to TRY to foreclose (1+ / 0-)
          Recommended by:
          shanikka

          but if they don't have a contractual justification, they can be stopped. Presuming you can afford an attorney.

        •  You Should (3+ / 0-)
          Recommended by:
          offred, DocGonzo, cotterperson

          Then spend time clicking through the links.  And definitely reviewinig the many many many lawsuits I've linked - and the thousands more I haven't.

          Ocwen has foreclosed on people who did not owe them a single red penny.  That's right - the mortgages had been paid in full.  Here's a link to just one story.

          Now, this homeowner had proof. And a lawyer. And it took her 4 years to get her house back.  I'm happy you're so confident in the proof you have. But others had proof as well (the Kweku Hanson suit, for example, in which he alleged he'd overpaid his mortgage for the entire life of his loan and still was getting threatened with foreclosure). And it didn't help them escape the nightmare one iota.

          Frankly you're naïve about this subject, if you are so confident that just because you have proof of your payments, you can't possibly get caught up in a situation like this.

          •  What You Should Do (1+ / 0-)
            Recommended by:
            shanikka

            Y'know, I just agreed that

            Except for the power that banks evidently have to foreclose anything they want without any reason.

            There's no reason for you to be obnoxious about explaining the answer to my question, which is going to be the case for the large majority of your readers.

            Thank you for the pointers.

            "When the going gets weird, the weird turn pro." - HST

            by DocGonzo on Mon Jan 06, 2014 at 07:40:49 AM PST

            [ Parent ]

            •  Sorry you found (3+ / 0-)

              My response "obnoxious." It wasn't intended to be.  But I admit that I get really frustrated sometimes when I go through such effort to back up everything I say in a diary and folks make comments that suggest that somehow, they haven't read it.  Bringing up the issue of "why should I worry, I can prove my payments" implies that you did not read it all, or you'd have known that doesn't really matter all that much when one is dealing with a company like this one.

              But I definitely did not mean to be obnoxious about making that point, and if I was, I am sorry.

              Love Africa? Love opera? If so, spread the word about this amazing upcoming documentary, The Tenor from Abidjan

              by shanikka on Mon Jan 06, 2014 at 10:02:30 AM PST

              [ Parent ]

              •  Thanks (1+ / 0-)
                Recommended by:
                shanikka

                Thanks for apologizing. You'll want to know you're apologizing for the line I was insulted by: "Frankly you're naïve about this subject". I had read the diary, but I didn't see what the threat was outside the power of any bank to officially foreclose on a ham sandwich these days - which I mentioned in the post to which you replied. I thought you might have even more to the story that I hadn't thought of, since you had so much info on the rest.

                Lots of people think that the lender somehow means more than the party to which you send payments, and which can foreclose on you if you don't. That other than the rate they charge it actually matters which bank lends to you. It doesn't. The only exception to that is the new and cruelly unjust power banks have gotten to foreclose.

                Since I already knew about that risk, I'm not more frightened by reading your diary. Though I'm sickened at the many other abuses that you documented continuing, and probably increasing, at the hands of Ocwen and its ilk.

                "When the going gets weird, the weird turn pro." - HST

                by DocGonzo on Mon Jan 06, 2014 at 02:18:03 PM PST

                [ Parent ]

    •  There are dozens of (13+ / 0-)

      shady practices you should be aware of.  Missing payments: you sent your payment, they say they didn't get it, or got it late, and they charge you a late fee.  They get your payment, and because records say you are behind on a payment, they "hold" it instead of applying it, and you get charged for that.  They fail to pay your home insurance premium. Your insurance company drops your coverage.  Then they enroll you, without your consent, in new coverage with a crap company who charges double the premiums, and your escrow payment goes up.  They fail to pay the taxes out of your escrow.  You get hit with a fine from the government.  They increase your escrow payment as if the tax penalty was the usual amount of your tax.

      Hopefully, you never have to worry.  But keep an eye on your bills, and make sure your payment are applied to you taxes and your insurance.  Keep a record of all of your communications with them.  Do not trust them.

      "YOPP!" --Horton Hears a Who

      by Reepicheep on Sun Jan 05, 2014 at 03:35:00 PM PST

      [ Parent ]

      •  Fail to Pay (4+ / 0-)

        I never let the bank pay my homeowner's insurance, taxes, or keep any escrow. Nor do I buy a mortgage that carries PMI interest. I simply pay them monthly the principal + interest they're due, on my credit card. I don't trust any of them to have anything except a dwindling IOU.

        My first mortgage I did leave an escrow for taxes and insurance. But a few months after closing they notified me the homeowner's insurance we'd presented at closing was insufficient (for no reason) and they were unilaterally selling me an inferior policy of their own for more than mine cost with smaller payout. So I refinanced and left them in the dust, though I paid them monthly until it was done. I'll never leave myself in that position again.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Sun Jan 05, 2014 at 06:22:13 PM PST

        [ Parent ]

        •  Escrow, PMI, etc... (5+ / 0-)

          PMI doesn't exist, and escrow is a (bad) option, for anyone with 20% or more equity. At less than 20% equity, usually PMI and escrow are required.

          If you're in an area where houses are relatively inexpensive, 20% may not be an issue. If you're a first-time buyer in an area with expensive houses, 20% may be a problem.

          After I bought my house I refinanced after a year to get rid of PMI and escrow (prices had shot up sufficiently). Since that time, the law was changed to let borrowers drop PMI if they get sufficient equity without refinancing.

          •  Should clarify what I mean by "(bad) option"... (5+ / 0-)

            People who have trouble setting aside money for large lump-sum expenses may, actually, be reasonably served by escrow. But the risk is that the servicer's screw-up on paying taxes or insurance doesn't take you off the hook - you're responsible for those costs whether the servicer does the right thing or not. So you're trusting a servicer who may or may not be worthy of that trust.

      •  I forgot to add (3+ / 0-)
        Recommended by:
        Chi, yoduuuh do or do not, shanikka

        that the mortgage company gets a kickback from the crappy insurance company, which is their incentive to let your homeowners' insurance lapse.  Yes, all this stuff is illegal, and they don't care, because they've got lots of lawyers, and you don't.  They figure the litigation into the cost of doing business.

        "YOPP!" --Horton Hears a Who

        by Reepicheep on Sun Jan 05, 2014 at 06:38:21 PM PST

        [ Parent ]

  •  Why does this not fall under RICO (6+ / 0-)

    Or a Corporate Death Penalty at the very least?

    "If you are still playing for Team Republican and want to have any honor whatsoever, you need to leave the Republican Party now, apologize to America, and work to remove it from our political system." - Brad DeLong

    by radabush on Sun Jan 05, 2014 at 01:59:22 PM PST

  •  Thank you for this comprehensive diary (13+ / 0-)

    I had never heard of Ocwen, and reading this is very frightening. Wells Fargo currently holds my mortgage - they bought it up from my original holder.  

    Bookmarking it to read more slowly - since much of this is over my head.

    "If you're in a coalition and you're comfortable, you know it's not a broad enough coalition." Dr. Bernice Johnson Reagon

    by Denise Oliver Velez on Sun Jan 05, 2014 at 02:04:10 PM PST

  •  ...when the 1% makes us the chumps (9+ / 0-)
    When is $2.1 billion just chump change?

    Warning - some snark may be above‽ (-9.50; -7.03)‽ eState4Column5©2013 "I’m not the strapping young Muslim socialist that I used to be" - Barack Obama 04/27/2013

    by annieli on Sun Jan 05, 2014 at 02:08:12 PM PST

    •  Ever get the feeling (3+ / 0-)
      Recommended by:
      shanikka, annieli, rubyr

      that we are just fodder to these cretins?

      That saying "throw away" society has a different meaning to Ocwen et al.

      "We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both." Louis Brandeis

      by wxorknot on Sun Jan 05, 2014 at 03:58:56 PM PST

      [ Parent ]

  •  Good god. (18+ / 0-)

    I've read a lot of things over the year to make my head explode, but this tops the list.

    There has to be a massive layer of corruption over the whole frickin' country for these sharks to still be in business and their executives running around free instead of in a federal prison.

    What hope is there, really, for the rest of us?  It's like the mafia has taken over and is looting every dime they can.

    If a free society cannot help the many who are poor, it cannot save the few who are rich." - John F. Kennedy

    by Dem Beans on Sun Jan 05, 2014 at 02:13:56 PM PST

  •  Thanks (5+ / 0-)
    Recommended by:
    shanikka, Onomastic, JoanMar, Yasuragi, rubyr

    nosotros no somos estúpidos

    by a2nite on Sun Jan 05, 2014 at 02:27:30 PM PST

  •  Damn and double damn them to hell. (11+ / 0-)

    Sharing this jaw dropping post all over the place, shanikka. Hope everyone does.

    The more who read this the better. It's the only shot in hell we have of both helping people and applying pressure to stop this obscene excuse of a business.

    Thank you for the tremendous amount of effort put into this.

    There is something in us that refuses to be regarded as less than human. We are created for freedom - Archbishop Desmond Tutu

    by Onomastic on Sun Jan 05, 2014 at 02:34:49 PM PST

  •  This is a Piece That Should Probably Be Re- (13+ / 0-)

    posted at least once more. I'm guessing the audience tonight isn't as big as it'll be some mid week.

    Thanks for this incredible amount of great investigation.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Jan 05, 2014 at 02:55:53 PM PST

    •  No Worries (13+ / 0-)

      The lack of interest, going by the last 2 hours, may also be that folks just aren't interested in this particular subject.  After all, these days there are "sexier" topics that catch Daily Kos' attention almost instantly that have nothing to do with the boring old subject of predatory mortgage servicing.  And especially not about a subject we don't like to think much about: the much-touted CFPB pretty much folding on the very issue it was created in response to, mortgage lending and servicing.

      Who knows?  I'm glad you found the piece informative, though.

      •  Well judging by some of the comments (2+ / 0-)
        Recommended by:
        yoduuuh do or do not, shanikka

        I think many folks here don't think anything bad will happen to them because they pay their bills on time, so they likely just tune this stuff out. Plus, not to be cynical and all (ok ,I'm totally being cynical), but the majority of traffic to this site is largely upper middle class white people, who tend not to be the targets of predatory mortgage servicing in the first place.

        Time is of no account with great thoughts, which are as fresh to-day as when they first passed through their authors' minds ages ago. - Samuel Smiles

        by moviemeister76 on Sun Jan 05, 2014 at 08:31:13 PM PST

        [ Parent ]

  •  Masterful work, Shanikka. I am saving this (8+ / 0-)

    to pass on to those who may need to know.

    I am not impressed with Eric Holder, a Wall Street insider.  I guess once you join that club with its palm greasing and secret handshakes your loyalty to the nation, the entire nation, flies out the window.  The DOJ has let us down once again.

    Building a better America with activism, cooperation, ingenuity and snacks.

    by judyms9 on Sun Jan 05, 2014 at 02:59:45 PM PST

    •  One of My Biggest (17+ / 0-)

      Sadnesses about the Obama Administration (and yes, President Obama himself--since as recently as last week he was parotting the industry line about irresponsible homeowners being responsible for the mortgage crisis) has been its approach to predatory mortgage lending and servicing.  After becoming a Senator, and prior to his running for President, President Obama co-sponsored (with Chris Dodd) an anti-predator bill with real teeth.  That gave me hope that he really Got It.

      Soon thereafter, Chris Dodd got a loan from Countrywide that folks insisted bore no relationship to his regulatory proposal.  And the bill that he and President Obama championed suddenly disappeared into the "ain't going nowhere" pile that nobody talks about.

      Since becoming President, President Obama has definitely made statements which suggest that he does, in fact, still get it.  But statements don't keep people in their homes.  Direction to his Attorney General, who was (and almost certainly will be again, when he gets done in Washington in January 2017, a partner (albeit inactive) at a major law firm whose bread and butter (like mine, sadly) comes from big business including in particular the financial services industry which includes players like Ocwen (I have no idea whether Ocwen is a client of Covington & Burling, before someone asks).

      That hasn't happened, sadly.  And clearly will not. This Administration is committed to settling and claiming that nobody really can prove that laws were broken when. I believe insiders like Neil Barofsky, when this Administration's largely-ineffective programs like HAMP were not really intended to truly provide recovery to homeowners, but instead to "foam the runway" for the banks. Given how little of the money allocated for them has actually been spent, and given how much on-the-books credit as an offset to out-of-pocket liability the federal government has given the lending industry for things it already was doing, it's hard to believe differently.

    •  I am not impressed with Eric Holder, a Wall Street (1+ / 0-)
      Recommended by:
      shanikka

      insider."

      POTUS and Wall St seem quite impressed with him, judy.

      For our fallen solders who come home from Afghanistan to Dover AF mortuary, "God bless the cause of "The Good War" for which they died" - As if any war can be called Good in its 13th year, America's longest war.

      by allenjo on Mon Jan 06, 2014 at 07:17:46 AM PST

      [ Parent ]

  •  This is a stunning diary (10+ / 0-)

    You will not be surprised to know I have never heard of Ocwen. I certainly will never forget about them now. Thank you very much for this diary.

    Time is of no account with great thoughts, which are as fresh to-day as when they first passed through their authors' minds ages ago. - Samuel Smiles

    by moviemeister76 on Sun Jan 05, 2014 at 03:08:41 PM PST

  •  ocwen is foreclosing on my house (12+ / 0-)

    the process has been going on for about 3 years.. meanwhile nationstar is now handing the loans and sending me bills, so i'm not sure they are really competing.

    Recently a court in ct said Ocwen needs to restart the foreclosure process and vacated the earlier attempt to auction.

    fact does not require fiction for balance (proudly a DFH)

    by mollyd on Sun Jan 05, 2014 at 03:09:41 PM PST

  •  Protect yourself. (16+ / 0-)

    Only pay these guys with bank transfers.

    I won't go through all the twists, but prosecuting a wire fraud crime and an associated conspiracy where there is a pattern gets to be trivial where the perp is paid with a bank transfer.

    Wire fraud is the substantive. Conspiracy carries 10 years US Code and usually the same with the states.

    (Goody-goody.)

    Their comptroller is also under a theoretical legal gun for cash-on-hand reports for IRS.

    BTW: This is an LLC so they can avoid doing Sarbanes-Oxley reporting.

    They're organized crime, so act to protect yourself accordingly.

  •  The wrong people got bailed out & home owners (3+ / 0-)
    Recommended by:
    shanikka, rubyr, yoduuuh do or do not

    Get punished. Will do my best to not have a mortgage.

    nosotros no somos estúpidos

    by a2nite on Sun Jan 05, 2014 at 03:50:26 PM PST

  •  YIKES (9+ / 0-)

    My mortgage got sold off to Ocwen just as I was selling my house. The transfer from OneWest took place, in fact, right in the middle of escrow closing. Both banks were absolutely no help and nearly delayed my closing, which would have put the sale at risk. And they still haven't reported the mortgage as paid in full on my credit report.

    I hate these companies with the passion of a thousand fiery suns, and I'm just glad to be renting again.

  •  Oddly enough, (6+ / 0-)

    my mom lost her home to Ocwen. Originally under Litton Loan Servicing, right as her balloon payment came due, and she had just started the process for Hardship under her disability, they "sold" the loan to Ocwen. When I made the payment, they refused it. When I called, they refused to take any payments, refused any negotiations, then sent threatening letters as it started to go into foreclosure.

    This is truly disheartening, because of all those people thrown out of their homes because Greed of commission ranked higher than people having a roof over their head by some greedy assholes in a company of nothing but greed.

    Thank you though, this explains so much, we were so stumped as to why this was happening.

    It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

    by LeftieIndie on Sun Jan 05, 2014 at 04:36:43 PM PST

  •  I'd advise anyone seeking a mortgage to only (8+ / 0-)

    consider credit unions and smaller banks which don't sell their home loans to other banks and servicing companies, and then hope that whoever you have your mortgage with doesn't change their policies.

    •  Thank you! (3+ / 0-)
      Recommended by:
      shanikka, rubyr, Chi

      I am planning to move in the next year or two and will follow your advice.  Go to a credit union or small bank and pay with bank transfers.  

      I'm a 4 Freedoms Democrat.

      by DavidMS on Sun Jan 05, 2014 at 04:52:14 PM PST

      [ Parent ]

    •  I did that but it didn't work (4+ / 0-)
      Recommended by:
      shanikka, rubyr, Chi, yoduuuh do or do not

      I refied with a local bank with just 2 branches.

      I was immediately moved to AHMSI for servicing, then Homeward,  and now Ocwen. All my payments are by bank draft. Not sure what else I can do.

      Filibuster reform, 2013 - woulda, coulda, shoulda.

      by bear83 on Sun Jan 05, 2014 at 05:03:03 PM PST

      [ Parent ]

      •  Sorry, my wording wasn't as clear as I intended. (2+ / 0-)
        Recommended by:
        yoduuuh do or do not, shanikka

        I meant the subset of smaller banks which don't sell their home loans.  Just because a bank is smaller doesn't mean they don't resell their mortgages.

        If the article is correct, your best defense against Ocwen might be to take out a second mortgage to make sure you don't have any equity left, and thus are not a target for them.  But that's generally not a good financial strategy.

        Alternately, you might refinance but that doesn't guarantee getting out away from Ocwen, plus it's expensive and time-consuming.

        Clearly, none of your options are ideal.

  •  I'm mystified. (3+ / 0-)
    Recommended by:
    shanikka, rubyr, grollen

    Why doesn't the equity go to the homeowner if Ocwen forecloses?

    The banks have a stranglehold on the political process. Mike Whitney

    by dfarrah on Sun Jan 05, 2014 at 05:05:25 PM PST

    •  These Days (6+ / 0-)

      There isn't a whole lot of equity most of the time.  The deposition excerpts were from the peak of the market/bubble--when there was a lot.  And the "costs" of foreclosure that are charged to the borrower by outfits like Ocwen are significantly inflated, and suck up a lot of what would be left these days in many cases.

      •  I was concerned (2+ / 0-)
        Recommended by:
        yoduuuh do or do not, shanikka

        because a friend of mine entered the HAMP program this summer; she thought she made the first payment after whatever changes were made and subsequent payments on time, but now, supposedly, she didn't make the 1st payment timely.  So, now she is supposedly behind one payment and is racking up the late fees.

        I have no idea what the new terms were.

        She went through a nonprofit to do this.  I told her to get in touch with the Consumer Finance Protection Agency just in case.

        She says she has equity that the bank wants to get its hands on, but me, not being an expert, didn't say anything, because I thought whatever leftover equity there is goes to the mortgagee.

        I just hope if worse comes to worse, she can at least get some of the equity, but when you read the horror stories, it sounds like the mortgagors/servicers suck up everything.

        The banks have a stranglehold on the political process. Mike Whitney

        by dfarrah on Sun Jan 05, 2014 at 08:08:37 PM PST

        [ Parent ]

        •  Not Sure Which Nonprofit She Used (0+ / 0-)

          But she might want to reach out to NACA and see if it can help her.  They are used to dealing with this particular bad actor--and the successors organization to ACORN are as well.

          Love Africa? Love opera? If so, spread the word about this amazing upcoming documentary, The Tenor from Abidjan

          by shanikka on Mon Jan 06, 2014 at 10:03:59 AM PST

          [ Parent ]

  •  This diary is a huge service to this community. (8+ / 0-)

    This is so well written that, even i, understood a lot of it. I will have to reread to really get it. I had not ever heard of this company. Never.  

    Thanks, shanikka. I am not a homeowner, yet this strikes fear into the heart for the health and future of this country.

    Can you submit this to magazines and see if someone buys it?
    This is information that the whole country needs to know about.
    It seems that Ocwen is getting away with every moral crime in the book. Maybe people knowing about this would decrease their power. I may be naive.

    I agree with the commenter above who says that you should republish until a lot of eyes have been on this. Also, I hope your diary is rescued. Very important.    

    "Southern nights have you ever felt a southern night?" Allen Toussaint ~~Remember the Gulf of Mexico~~

    by rubyr on Sun Jan 05, 2014 at 05:42:14 PM PST

  •  it was a great day (4+ / 0-)

    when we finally got our mortgage moved from Ocwen to SFPCU (a Credit Union)

    Ocwen absorbed GMAC after they dissolved and we found ourselves being charged late fees that had previously never been assessed for our weekly auto pays

    not only were there late fees, Ocwen notified us that the entirety of our balance was due when only a fraction actually remained

    GMAC had rolled the overage from the prior month into the balance for the next and never charged us a late fee

    sorry to hear they were able to get away with only a slap on the wrist ... hopefully they will receive their balance due

    aside: if you're in the SF area ... NERT training will grant you the ability to join SFPCU and is a great option to move away from predatory banksters

    "a lie that can no longer be challenged becomes a form of madness" -Debord

    by grollen on Sun Jan 05, 2014 at 05:48:09 PM PST

  •  This can't be right. (3+ / 0-)
    Recommended by:
    bear83, shanikka, mommyof3

    Two GOP members today on Face The Nation told me that to create jobs all these pesky regulations need to go away.

  •  OCWEN has held one of my loans (2+ / 0-)
    Recommended by:
    yoduuuh do or do not, shanikka

    for a few years now. I had a few complaints about Bank of America, and recently they sold my loan to Green Tree, who started out by trying to double collect and have billed me for twice what I owe almost every month since. Trying to get information from Fifth Third about what you owe requires a security check worthy of the NSA, and their late fees are through the roof (more than than the payment) on their HELOCs, so I've learned to just pay way over if I don't have a bill on hand. And all of them, with Citimortgage being the worst offender, over-collect escrow and send me back a big check every year.

    Point being, they are all pretty bad, but OCWEN is the one I have never had to contact with a complaint. (Well, I haven't had any trouble with BB&T besides absurd insurance hassles, but that loan is only fourteen months old.) Then again, I'm a sophisticated borrower who pays my bills on time, and all but one of these are relatively high-interest rental loans.

    I'm not saying the gist of the diary isn't true (although I do note the diarist blames them for predatory lending, even though they service, not originate, these loans), only that if OCWEN winds up servicing your loan, it isn't the end of the world, providing you keep up on your payments. And no, they have never lost a check - it is the Greentree check I always send certified these days, as they won't cash it right away if it arrives close to the cutoff date and they think they can get away with charging a late fee.

    Don't get me wrong, Im not claiming OCWEN is good here - just that old equivalency thing, which may or may not be false, that the rest are equally bad. Worse, in my personal experience.

    •  Ocwen Was (1+ / 0-)
      Recommended by:
      mommyof3

      As the diary notes, and links within the diary demonstrate, early in its history Ocwen was a federally chartered savings bank.  It did direct lending as well as servicing. Ocwen surrendered its banking charter in 2005 following an OTS investigation into its predatory practices and a number of class action lawsuits.

      So yes, Ocwen is to blame for predatory lending as well as servicing.  Indeed, that's how I first heard of Ocwen--representing clients who had been predated upon.

      I am glad your experience with Ocwen is OK, however.

  •  What a tour de force. (2+ / 0-)
    Recommended by:
    yoduuuh do or do not, shanikka

    Thanks for writing this!

  •  Question for you, Shannika. (1+ / 0-)
    Recommended by:
    shanikka
    a new, a program to write down mortgage principal on some of its loans
    A friend of mine apparently recently used this program 2 years ago, and apparently she is precluded from getting a mortgage for the next 5 years.  She indicated the program is called "Cancellation of Debt." What exactly is it about that program that affects one's ability to obtain a mortgage?  She always had excellent credit, paid items on time, etc. She was just looking to lower her mortgage payments on a condo, and did so with Ocwen's Cancellation of Debt program. Now she is unable to purchase a home that she wants due to the affect of this on her credit or taxes.

    Sounds like a modification - and form what you said above sounds like it would be a reasonable thing to do. I wonder why she is (apparently) precluded from obtaining a mortgage.

    Thanks for the diary.

    "No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." -- JC, Matthew 6:24

    by Chi on Sun Jan 05, 2014 at 08:52:34 PM PST

    •  I Do Not Know All the Details (2+ / 0-)
      Recommended by:
      offred, Chi

      Of the SAM program as it relates to prepayment, but since it's a voluntary program, the first step is for your friend to make a qualified written request pursuant to RESPA to Ocwen for a copy of the agreement that she signed. It may well be a contractual restriction that she agreed to.  If it is not, then she should contact an attorney.

      SAM is theoretically a cancellation of debt program. In exchange for the sharing of equity upon sale/refinance, principal is forgiven over the first three years of the loan. In theory, a borrower would never sell or refinance.  Thus, they would have received the benefit of debt cancellation.  You don't say whether the issue is that her mortgage is being reported to the credit agencies as being partially written off and that's the reason she can't refinance, as opposed to a contractual requirement.

      Either way it should not affect her taxes except for the last (3rd) year of her participation in SAM (my understanding is the write-down occurs over a 3-year period.)  Until it just expired in December 2013, the IRS mortgage forgiveness program that was created by the Obama Administration provided that amounts of mortgage deemed received by a borrower upon short sale were exempt from income taxation.  This SAM program results in the same thing, basically, except that the lender allows her to keep title. She should consult a tax professional and see if she can figure out precisely what is going on.

  •  Ocwen (1+ / 0-)
    Recommended by:
    shanikka

    a case for the corporate death penalty, if there ever was one. And "losing" mortgage payments and foreclosing ought to be a criminal offense - in fact I bet a creative DA could charge it as fraud or the like.

  •  And this is "News" to whom? (0+ / 0-)

    Sitting in a house which I "might" be able to sell for $80K if I were lucky, which the town has valued at $121K and which GMAC/ALLY/OCWEN dragged through a "modification" for a year, constantly claiming items were missing, papers never arrived, faxes were incomplete (I never sent a single fax - all documents were emailed to the 11 different emails in PDF Format which either gets there complete or doesn't get there) I am now paying about $200 a month less than I was on a loan for $205K (Fees and fines you know). Evidently my state won't actually allow a walkaway. But that would have been the best thing for any functioning business. GMAC is bankrupt, ALLY is bankrupt and OCWEN uses all the same phone numbers, emails Mailing Addresses. Let's face it - the "Real Estate"system here is just as idiotic as the "Health Care" system is. It is not reality in the farthest stretch of the word. Fake money - for lawyers and paperwork need not have been poured into the mix. One phone call from a US Person with a brain and some clout could have had the whole thing settled in a week. But I suffered through a year of speaking to people in Mexico City, Manila, and other places where nothing could be done. If we want a change it will take a financial collapse that will make 1930 look like a small dip.

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