Ocwen Crashes Over 50% After N.C. Bank Commissioner Issues Cease And Desist Letter

Tyler Durden's picture

Former hedge fund hotel-darling and mortgage servicer Ocwen Financial plunged over 50% after the North Carolina Commissioner of Banks and state mortgage regulators from over 20 states issued a Cease and Desist order to subsidiaries of Ocwen to address mishandling of consumer escrow accounts and a deficient financial condition. Specifically, the order prohibits the acquisition of new mortgage servicing rights and the origination of mortgage loans by Ocwen Loan Servicing.

The summary findings from the C&D (link)

The Commissioner of Banks (“Commissioner”) having determined that Ocwen Financial Corporation has engaged in, or is engaging in, or is about to engage 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.

And some further details:

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.


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.


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.


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 be well beyond Ocwen’s financial capacity to fund. 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 could leave a vast number of consumers with unaudited and 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 request for 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 that Ocwen continuing as a going concern would be in doubt.

The stock is plunging on the news that its business model may be terminally impaired.

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Evan Wilson's picture

This may not be a 'dip'.


Raffie's picture

Ok, how about "Be the 1st on your block to buy the falling knife factory."

FrozenGoodz's picture

This servicer is a POS ... I've no idea how they're still in business ... if they ever acquire the servicing rights for your [mortgage] loan A) you've likely a history of missed payments B) they think they've a decent shot at foreclosing and C) run

JRobby's picture

"Their cash flow impared, they obviously fell behind on the payments"

"To who?" (Laugh Track Deafening.! !!)

corporatewhore's picture

wasn't ocwen involved with robosigning back in the first stage of this depression

I am Jobe's picture

Imagine howmany more are out there.  

Seasmoke's picture

Die Ocwen. Die. And take the other financial terrorists with you.

Chippewa Partners's picture

Give those hedge fund hotel names enough time to go TU and going short is once in a great while profitable. It's the squeeze that hurts!

Yen Cross's picture

  Free Jon Corzine.

Stroke's picture

Funny, Yen......You know the Too Big To Jail remain free...ask Hillary

scoutshonor's picture

A company being held accountable for its business practices?  This has to be fake news.

Eddie Baby's picture

Ocwen saved me a lot of money.  They were so bad I had to figure out a way to refinance my loan and get away from them, significantly lowering my mortgage payments in the process.  Thank you Ocwen and all your Indian CS.

FrozenGoodz's picture

They're the bottom of the servicing barrell .. it's literally just a numbers game for them ... find enough delinquent loans to foreclose on to successfully keep head above water

Crash Overide's picture

In Chicago the Ocwen scam was linked to:

Joe Zakovick - Developer

Ryan Holden - The scam pitch guy

Brian Soloman - Mortgage broker

PanAmerican Mortgage 

buzzsaw99's picture

ripping off people's escrow is about as low as you can go imo.

chomu's picture

Good gawd...you only need to pay out funds from en escrow acct twice per year. How effing hard can that be?


Forward me the spreadsheets, I'll fix it.



swmnguy's picture

This isn't incompetence.  It's an old trick, and a filthy one.

My wife and I bought our first home in 1996.  The mortgage was sold 3 times in the first 3 years.  Each time, a few months after we had a new servicer, our insurance agent called us to tell us our homeowner's insurance hadn't been paid out of our Escrow and we had a deadline for cancellation.  

Each time I called the loan servicer and asked them what they were doing with our escrow account.  The first time, the guy on the other end of the phone tried to tell me it was my insurance company's fault for not giving them instructions on how to pay the insurance.  I told them it was absolutely their responsibility to pay it and that no matter what they did, I was calling my state's Attorney General and Commerce Commission.  I did, too.  My insurance agent called me back within the week to tell me the insurance company had been paid.

The next two times it happened, I called the new servicer and told them the story of the first year, and again, within days the payments were made.

The servicers figure the homeowner will get the cancellation notice, freak out and pay it themselves, despite their already having paid it through the escrow.  Maybe they get caught 999 times out of 1000, but that 1000th time they can keep the money.  Over a large enough portfolio of loans, that's a lot of money.

The key to the scam is to be incompetent.  Since every aspect of American society has been captured by Corporate Finance Capitalism, incompetence and insolvency are accepted excuses for fraud and theft.  Companies can take money, not deliver what they promised in return, claim incompetence, and then claim actually fulfilling their contract would put them out of business, and Presto!  They don't have to do what they promised, and they keep the money.

Uncle Tupelo's picture

R'uh R'oh Raggy.....

runnymede's picture

OCWEN= Exhibit 1A of .gov and corporate cronyism and the resulting frauds.

In non-corporate-speak, sub-prime actually means "shit loans"

In related news, an unattractive co-worker is now referred to as sub-beautiful 



SmittyinLA's picture

Some other bottom feeder will take up the slack and fund Schumer and Schiff's campaigns

RagaMuffin's picture


stormsailor's picture

yeah,  we are pretty laid back in north carolina, but once that line gets crossed, well, our nickname is "tarheels" because in the civil war, north carolina troops had a dearly earned reputation for sticking in their positions against impossible odds.  if you look at pictures of the "sunken road" at antietam with the dead bodies, those are ramseurs troops

swmnguy's picture

Ocwen is pure, unadulterated shit and fraud.  I hadn't heard they were running the old Escrow-stealing scam, but I'm not surprised.

My wife and I bought our current house in 2009.  A previous owner had lost it in 2006.  He had a primary and a second mortgage on it.  Somebody else bought the house from the bank, and they sold it to us.  We knew there was a foreclosure in the history, and we made damn sure the title was clear.

It turns out the guy who lost the house in 2006 walked into a pawn shop in 2009 to look at something, and then armed robbers burst in and started shooting.  The guy caught a bullet and died instantly.

Ocwen wound up with this poor dead bastard's second mortgage.  Supposedly it's for $48,000 or so, and they want over $75,000 now.  They called a couple of times.  I answered and demanded to know how they got my phone number, which I'd had for 20 years by then; 18 of which years before I'd bought this house.  The guy lied and said it was the phone number on the collection file.  I told him I knew he was lying because I'd had that number long before I had this house, and I had never done business with him.  He hung up and never called again.

Every month or so I get a bill from Ocwen, addressed to the dead guy who hasn't lived in that house for 11 years, never mind the 8 years I've lived there.  I've printed up the news stories about his murder and sent them to Ocwen.  That doesn't keep them from sending a bill.

Obviously Ocwen is keeping this dead man's second mortgage, on a home he lost by not paying the first mortgage, on their books as an asset.  If they stopped sending bills and admitted they knew the guy was dead, they'd have to take the mortgage off their books, one would think.

So the HedgeTards who love them some Ocwen are buying at least one "asset" that has no value whatsoever.  That second loan is never going to be paid, at all.  Not one red cent.  I would venture a wager this isn't the only completely worthless "asset" Ocwen holds and sells pieces of to the Greater Fool.

My credit union doesn't sell their mortgages, so I'll never have to deal with these fuckers.  But if I did, I wouldn't escrow anything.  And I'd probably send them cashier's checks, Registered Mail, signature required.  Ocwen is a snakes nest of thievery and deceit.  Bastards of the First Water.

stormsailor's picture

i probably have a couple hundred homeowners policies in my agency that have ocwen as leinholder and escrow.  i am in north carolina and have not noticed any problems with renewals. however, chase is nearly impossible.

Schlub's picture

So glad when they were sold our mortgage we went Credit Union. You could smell them right through the mail, lol. Fuckem'!

CHX13's picture

That may prove to be a ultimately fatal gash...

secretonfire's picture

OCWEN TRAFFICS IN CRIME.  Ocwen hungers for fraud/theft like sharks crave flesh/blood...


VegasBob's picture

In 2014 Ocwen started dunning me for the balance on a short sale 4 months after they sent me a written notice that the balance was written off and zeroed out.

I had to hire a FDCPA (Fair Debt Collection Practices Act) attorney to get them off my back.  They settled with the attorney and I got the statutory $1,000 payment from Ocwen for harassing me with fraudulent debt collection calls.

If any financial company deserves to be put out of business it is Ocwen Financial.  They are truly a criminal enterprise.