Ocwen, the Mortgage Loan Servicer, Pays $2.2 Billion for its Mess

Citizen Wealth Financial Justice Foreclosure Ideas and Issues

ocwenNew Orleans   I found myself shaking my head reading that Ocwen, the giant mortgage loan servicer, had finally been brought to the bar and agreed to pay out $2.2 billion for making a mess of mortgages they were servicing for all of the banks from 2009 to 2012.  For the homeowners caught in the crossfire in Florida for example, the attorney general estimates they will pick up about 1200 bucks a piece, which is small consolation.

            Ocwen was a strange company to deal with, though there were many that were much worse.  It was neither fish nor fowl, since they didn’t broker the mortgages or make the decisions on the loans, they just serviced whatever came downstream to their port, be it ocean liners, garbage or dead bodies, so to speak.  In negotiating with them you flew into West Palm Beach and then tried to sort out which piece of a sprawling set of low rise buildings might be their offices, as opposed to some other outfit.  They were not high on show or style and to their credit they were straightforward about fixing any individual issues that ACORN brought to them for our members, while still shrugging their shoulders when it came to their willingness to play a larger role, sometimes agreeing and sometimes not.

            Their invisibility in the mortgage crisis made them hard to target for us.  I was glad to see that most of their problems came after we had worked out some understandings, and I wasn’t surprised to hear that a lot of their problems came from purchases of Litton in Houston, who had been owned by Goldman Sachs, but lived in a world of its own filled with more bluster than brass when we dealt with them repeatedly, and Homeward, a recently rebranded outfit, also based in Texas.  They handled a lot of big blocks of mortgages for investors as primary servicers, and to their credit seemed to have convinced some of them to actually write down the value of mortgages, which should have been the default for the banks, rather than allowing them to continue to prop up their balance sheets.

            Interestingly, this is the first big settlement from the new Consumer Protection Financial Bureau.   There was no admission of guilt and I’m not sure why the period only looks at 2009 forward rather than some of the tranches handled by Ocwen even earlier, but it’s worth watching how CPFB, as a new agency, will operate as a regulator and enforcer for some of these outfits like Ocwen that are “tweeners” and have been getting away with not exactly murder but with some crimes, both high and low, against citizen wealth that can’t be tolerated.

            Keep alert and your eyes peeled.  We need some real advocates in Washington again.