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OCWEN LOAN SERVICING, LLC; 1661 Worthington Rd., Suite 100; West Palm Beach Fl 33409
April 20, 2017
CEASE AND DESIST ORDER
The Superintendent of the Bureau of Consumer Credit Protection (hereinafter referred to as ?the Superintendent?) having determined that Ocwen Financial Corporation has engaged in or is engaging in, acts or practices constituting violations of state and federal law and applicable regulations, hereby issues the following FINDINGS OF FACT and ORDER TO CEASE AND DESIST.
A. PARTIES AND JURISDICTION
1. Ocwen Financial Corporation (?OFC?) is a Florida corporation with headquarters in West Palm Beach, Florida.
Ocwen Mortgage Servicing, Inc. (?OMS?) is a U.S. Virgin Islands corporation with headquarters in St. Croix, US Virgin Islands and an assigned NMLS identifier number of 1089752. OMS holds the following licenses or registrations in Maine: debt collector license No. DCL 12828 and servicer registration No. SVR 12762.
Ocwen Loan Servicing, LLC (?OLS?) is a Delaware limited liability company with headquarters located in West Palm Beach, Florida and an assigned NMLS identifier number of 1852. OLS holds the following licenses or registrations in Maine: servicer registration No. SVR 9819; supervised lender license No. NLC 654762; and debt collector license No. DCL 6982. OLS at all relevant times herein was a wholly-owned subsidiary of OMS, which was a wholly-owned subsidiary of OFC (collectively referred to herein as ?Ocwen?).
2. The Bureau has jurisdiction over the registration and regulation of persons and entities engaged in the business of residential mortgage loan servicing in Maine pursuant to Title 9-A M.R.S. ? 6-201 and 6-202 through his powers as Administrator pursuant to Title 9-A M.R.S. Article VI.
3. The Multi-State Mortgage Committee (?MMC?) is a committee of state mortgage regulators who have agreed to address their enforcement concerns with Ocwen in a collective and coordinated manner. On February 28, 2015, the states of Florida, Maryland, Massachusetts, Mississippi, Montana, and Washington (collectively, the ?Examining States?) conducted a Multi-State Examination of Ocwen in order to determine Ocwen?s compliance with applicable federal and state laws and regulations, financial condition, and control and supervision of the licensed mortgage servicing operations. The Multi-State Examination of Ocwen covered the period of January 1, 2013 to February 28, 2015. The Superintendent entered into the agreement to be part of the MMC under the authority granted to him by Title 9-A M.R.S. ?6-117(2).
4. Pursuant to Title 9-A M.R.S. ? 6-106 the Bureau is authorized to inspect the books, accounts, papers, records, and files of mortgage loan servicers, transacting business in Maine to determine compliance with the provisions of Title 9-A M.R.S., and any rule, or regulation issued thereunder, and with any law, rule, or regulation applicable to the conduct of the licensed business.
B. FINDINGS OF FACT
5. During the examination, the Examining States identified several violations of state and federal law, including, but not limited to, consumer escrow accounts that could not be reconciled and willful and ongoing unlicensed activity in certain states. Additionally, it was determined that Ocwen?s financial condition was significantly deteriorating.
6. Although the Examining States were unable to gather comprehensive documentation of the extent of unlicensed activity because Ocwen?s management failed to respond to requests for information in a timely manner, the examination found that Ocwen subsidiaries were conducting unlicensed servicing activity in numerous jurisdictions. This unlicensed activity was cited in the report of exam. The Examining States had numerous conversations with the Board of OFC in which the Examining States communicated that these continuing violations were unacceptable and would not be tolerated. Although OFC partially addressed the unlicensed activity two years after it was initially cited, unlicensed activity is believed to continue in certain jurisdictions.
7. The MMC examination found that Ocwen has been unable to accurately reconcile many of the consumer escrow accounts in its portfolio. Consumer escrow accounts are accounts that contain consumer funds held for the payment of taxes and insurance. The MMC examination further found that Ocwen failed to make timely disbursements to pay for taxes and insurance from escrow accounts on numerous loans. The MMC examination also found that Ocwen routinely sent consumers inaccurate, confusing and/or misleading escrow statements. Maine has received 55 complaints since late 2012 dealing with escrow, accounting or other loan servicing issues. The case file numbers and Maine municipalities in which the affected properties were located are as follows:
16823 Winslow
17386 Corinna
17679 Sanford
17682 Gray
18193 Rumford
18370 Greene
18450 Augusta
18517 Monroe
18563 Saco
18567 Sanford
18886 Winterport
18903 Winterport
19266 Scarborough
19270 Harrison
19323 Topsham
19473 Greene
19597 Otisfield
19703 Belgrade
19708 Yarmouth
19749 Gorham
19777 Bowdoinham
19954 Sidney
20000 Sidney
20071 Monroe
20117 Yarmouth
20183 Westbrook
20287 Bridgton
20385 New Gloucester
20463 Kennebunk
20469 North Waterboro
20478 Kennebunkport
20497 Portland
20507 Buckfield
20817 Portland
20830 Scarborough
20910 Yarmouth
21094 Standish
21138 Raymond
21139 Biddeford
21219 Limington
21258 Lincoln
21292 Otisfield
21311 Otisfield
21414 Lewiston
21415 New Gloucester
21439 Phippsburg
21440 Dedham
21489 North New Portland
21521 Buckfield
21759 Bangor
21898 Portland
22203 Kittery
22446 Bryant Pond
22615 Hebron
23188 Woolwich
- In 2015, Ocwen failed to provide key financial documents and reconcilements of its financial statements to regulators.
- Based on the findings of the examination and subsequent communications with OFC, the state regulators and Ocwen entered into a Memorandum of Understanding (MOU) on December 7, 2016.
- The MOU required Ocwen to retain an independent auditing firm to perform a comprehensive audit and reconciliation of all consumer escrow accounts, with a report to be furnished by the Auditor to Ocwen and the MMC within five business days thereafter. The audit plan was to be submitted to, and approved by, the MMC no later than January 13, 2017.
- Ocwen?s response to the state regulators on January 13, 2017, was that the reconciliation of escrow accounts, which is paramount in ensuring the appropriate management of consumer funds, would cost $1.5 billion and well beyond Ocwen?s financial capacity. Ocwen has suggested instead that a sample of 457 escrow accounts be reconciled out of 2.5 million active first lien escrow accounts that Ocwen has serviced since January 2013. This proposal would leave a vast number of consumers with unaudited and/or inaccurate escrow accounts.
- The company is currently facing numerous substantiated consumer complaints regarding escrow accounts that have been mismanaged, resulting in significant harm to consumers, and requesting reimbursement of monies wrongfully withheld or misapplied.
- The MOU required Ocwen to provide, among other things, a viable going forward business plan that encompassed an analysis of its financial condition going forward. The purpose of the plan was to analyze Ocwen?s future financial condition incorporating and encompassing all known or reasonably certain liabilities.
- Ocwen?s going forward plan submitted in response to the MOU did not provide a complete assessment of its financial condition because it excluded significant liabilities. If the going forward plan accurately accounted for known or anticipated regulatory penalties and other operational costs, including, but not limited to, the expenses of moving to a new servicing platform and complete reconciliation of consumer escrow accounts with restitution to impacted borrowers, it would indicate the company would not continue as a going concern. C. CONCLUSION OF LAW
- Based upon the information contained in Paragraphs 1 through 14, the Superintendent has determined that:
a. Ocwen has engaged in, is engaging in, or is about to engage in, acts or practices which warrant the belief that the company is not operating honestly, fairly, soundly, and efficiently in the public interest, and /or in violation of standards governing the licensing and conduct of a mortgage loan servicer including, but not limited to, the provisions of Title 9-A M.R.S.
b. The public interest will be irreparably harmed by delay in issuing a cease and desist order to Ocwen.
c. The Superintendent has the authority pursuant to Title 9-A M.R.S. ? 6-108(1) to issue this order without hearing when the Superintendent is of the opinion that immediate action is required to protect the public interest and the creditor does not maintain a permanent place of business in this state.
CEASE AND DESIST ORDER
IT IS HEREBY ORDERED that:
Ocwen shall immediately cease acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can show it is a going concern by providing a financial analysis that encompasses all of the liabilities Ocwen currently maintains, as well as liabilities it has knowledge it will incur in the course of its business; Ocwen shall immediately cease from acquiring new mortgage servicing rights, and acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can provide the state regulators with a reconcilement of its escrow accounts showing that consumer funds are appropriately collected, properly calculated, and disbursed accurately and timely; and This Order is effective immediately upon signing and shall remain in effect unless set aside, limited, or suspended by the Superintendent or upon court order after review under Title 9-A M.R.S. ? 6-108(1). This Order shall not be construed as approving any act, practice, or conduct not specifically set forth herein which was, is, or may be in violation of relevant state or federal laws and regulations. NOTICE OF HEARING A respondent aggrieved by an order of the administrator may obtain judicial review of the order in the Superior Court. The proceeding for review is initiated and conducted in accordance with Title 5 M.R.S., chapter 375, subchapter VII.
The Bureau will post a copy of any final order or decision in this matter to the NMLS under regulatory actions which will be viewable by regulators and the public. State of Maine Bureau of Consumer Credit Protection William N. Lund, Superintendent By:
| Date: April 20, 2017 | /s/Mark E. Susi |
| Mark E. Susi | |
| Staff Attorney | |
| Bureau of Consumer Credit Protection |