The troubled servicer has been busy with regulators and now a group of major mortgage bond investors are planning to sue the company.
The bad news keeps coming for Ocwen Financial Corp. A group of major mortgage bond investors took the first step toward suing the troubled servicer, and the recent settlement with the state of California is costing the company $2.5 million.
The group of investors, which includes BlackRock, MetLife and Pimco, are accusing Ocwen of having failed to properly collect payments on $82 billion of home loans. According to Reuters, the group sent a formal notice of non-performance to Ocwen and trustees for 119 residential mortgage-backed securities trusts, alleging improper loan modification practices, wrongfully recouped advances and a failure to account for cash flows.
The notice also stated Ocwen steered work to affiliates such as Altisource Portfolio Solutions and Home Loan Servicing Solutions for allegedly unnecessary, or overpriced, mortgage servicing to the detriment of the trusts, investors and borrowers, according to the media outlet.
The case is the latest setback for Ocwen, which recently settled with California’s Department of Business Oversight for $2.5 million. The regulator had sought to suspend the mortgage license of Ocwen, claiming the payment collection firm has failed to turn over the right paper work showing it complies with the state’s laws protecting homeowners.
According to the agreement, Ocwen will retain an auditor to review its mortgage servicing practices. The state previously accused Ocwen of defying requests for information.
California's Department of Business Oversight agreed it would no longer seek the suspension in return for the order, according to the Wall Street Journal.
