On October 24, Ron Faris, CEO of Ocwen Financial, made an unusual move for the head of a $2 billion-a-year corporation: He apologized. Specifically, he sent out a mea culpa-filled open letter addressing the 2.7 million homeowners whose mortgages are serviced by Ocwen, apologizing for a glitch that backdated time-sensitive letters. “Letters were dated when the decision was made to create the letter versus when the letter was actually created,” Faris confessed. The missive came on the heels of well-publicized allegations by New York’s Dept of Financial Services (DFS) accusing the company of doing just that, and suggesting that the delayed loan modification letters may have resulted in foreclosures. At first, Faris claimed that only 283 New York homeowners had been impacted. However, he quickly retreated from that number after DFS said the number could be higher, way higher — perhaps in the “hundreds of thousands” — and not confined to New York.
The Faris letter was clearly damage control, an attempt to staunch the bleeding and send a message to the investment community following a Moody’s credit downgrade and a precipitous drop in Ocwen stock, which dropped to $19.04 on October 23 and fell again to $18.55 on October 27, the lowest price since June 2012.
This isn’t the first time that Ocwen has had to circle the wagons in response to jabs and uppercuts by New York DFS Superintendent Ben Lawsky, who’s developed a reputation as somewhat of a regulatory Popeye, taking on the servicing industry with a zeal matched only by Sen. Elizabeth Warren and a few other left-minded Congress members. Lawsky’s prime targets have been non-bank servicers like Ocwen — companies that saw a cash cow in the growing desire of mega-banks like Wells Fargo and Bank of America to shed their so-called “toxic” sub-prime mortgage portfolios in the wake of litigation and regulation from 2010’s “Foreclosuregate.” As Lawsky noted in an address earlier this year to the New York Bankers Association, these non-bank mortgage servicers have bought up a significant share of U.S. mortgages:
[In 2011, all of the ten largest mortgage servicers were traditional banks. Today, four of the top ten are non-banks. And those four non-bank firms alone service more than a trillion dollars of loans—10 percent of the residential mortgage market, and climbing.
Lawsky has held Ocwen’s feet to the fire over allegations of robo-signing and a failure to provide reviews of loan modification denials. In December 2012, DFS required Ocwen to install an independent monitor to ensure that the company adhered to promises to stop consumer-unfriendly practices. It’s questionable whether the monitoring is having the intended effect. Just this May, the New York Post reported that the company was trying to “gag” homeowners who wanted a loan modification approved, reportedly telling them not to complain to anyone — regulators or the press — or else. After DFS looked into the matter, Ocwen agreed not to enforce these gag orders.
Chris Wyatt, a mortgage servicing executive of 20 years turned homeowners’ advocate, says he’s seen many homeowners run ragged on Ocwen’s modification roller coaster. He’s heard complaints of all kinds: from inexplicable penalties and fees, to mortgage payments not applied by the due date, and hair-pulling accounts of time spent on the phone with customer service representatives trying to get anything resembling accurate information (I’ve covered some of this terrain in two previous In These Times pieces).
This spring, Wyatt shared his concerns about backdated communications with New York’s DFS and the federal Consumer Financial Protection Bureau (CFPB). It seems DFS took note, evidenced by its investigation. Samuel Gilford, a CFPB spokesperson, didn’t want to comment specifically on Wyatt’s communications, although there’s no doubt the bureau has an eye on Ocwen. In December 2013, after uncovering servicing shenanigans that included illegal foreclosures and unauthorized fees and penalties, the CFPB joined 49 state attorney generals and the District of Columbia in securing a consent order requiring Ocwen to provide homeowners with $2 billion in principal reductions and return $125 million to foreclosure victims. In a press release, CFPB said that Ocwen “took advantage of borrowers at every step of the process.”
But Wyatt is concerned that regulators aren’t moving with alacrity to deal with backdating, which, he says, continues to claim new victims each day. One homeowner he’s working with (who requested anonymity) received a default notice dated October 23 that wasn’t delivered until November 3. According to Wyatt, it’s standard industry practice to get a default notice out immediately, since a 30-day clock starts running from the date on the notification. A check of post office records confirmed that the letter was mailed two days after the October 23 date. Such delays shorten the window of opportunity for desperate homeowners trying to avoid foreclosure.
Tommy Cooper, a homeowner in Manvel, Texas, is not sure whether he’s been subject to backdating, but the maze of confusing communications he’s received from Ocwen in the course of a months-long battle against foreclosure have caused him considerable distress — and made a mockery of Ocwen’s trademarked slogan, “Helping Homeowners is What We Do.”
In April 2012, Ocwen told Cooper that his home had been sold off in foreclosure. The news threw him for a loop because he had just applied for a loan modification through Neighborhood Assistance Corporation of America (NACA), a non-profit advocacy group that has a strong record of helping struggling homeowners stay in place. Although told that a real estate trust now owned his house, Cooper kept living there while trying to work with local housing counselors in seeking a new modification.
After a series of applications and denials, he received a loan modification offer from Ocwen on February 22, 2013. Ocwen claims he rejected the offer. However, Cooper says he simply asked for more information and faxed over a list of questions supplied by NACA. They were all standard issue (“please provide an escrow analysis; please provide a breakdown of my unpaid principle balance”)
A letter dated July 28, 2014, from an Ocwen “ombudsman” to the Consumer Protection Division in the Texas Attorney General’s office, following a complaint by Cooper, also leaves out the February 2013 offer and alleged denial in listing his loan history. According to Wyatt, this sort of omission is extremely serious; any letter to state’s top law enforcement official should have been vetted for completeness.
When I asked Ocwen about the denial, and why there was no response to Cooper’s questions, the company declined to comment.
The pain and frustration of the ordeal, Cooper says, was enough to send him into that dark land that many foreclosure victims know all too well: relentless anxiety and sleepless nights. For the past two years he’s been on anti-depression meds. When we started talking, the first thing on his mind was to convince me that he wasn’t a “deadbeat,” the sort of blame-the-victim label slapped on underwater homeowners by folks like CNBC blowhard Rick Santelli (“How many of you people want to pay your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?”). Cooper gave me a list of friends and relatives to talk to; people who could attest to his veracity as a stand-up guy. One was talk show host, author and advocate Tavis Smiley.
“He’s concerned about the suffering of others,” Tavis Smiley told me by phone, “and that’s the tragic irony of this situation. Having spent a life in service to others, he now finds himself as a victim of this system.” Smiley went on to talk about Cooper’s involvement in training young people in a “Youth to Leaders Program” and an initiative titled “Ending Poverty:America’s Silent Spaces.”
Cooper, who is still struggling to keep his home, sent me some recent examples of Ocwen’s Gatling gun approach to homeowner communications. This October, he received three separate letters from Ocwen within a day of each other: one acknowledging receipt of an application, one denying a loan modification, and one thanking Tommy for his inquiry regarding his loan and saying his application is under review. Cooper says none of these letters came in response to any requests he made. It seems that Ocwen’s computers have gone rogue, like HAL in Kubrick’s 2001: A Space Odyssey.
On November 13, Cooper was dragged into county court by lawyers representing representing Deutsche Bank, the trustee of the real estate trust that now owns his house. The court ruled that he had until November 24 to get himself and his possessions out the door. If he wanted to appeal, he’d have to fork over a bond of $34,680.
Meanwhile, the New York Post reports that Lawsky may be leaving his post at the end of the year. His spokesperson, Matthew Anderson, tells In These Times, “He loves his job and is very busy doing it to the best of his ability each day. He hasn’t decided on his plans for the future.”
One can only hope that he stays the course. He’s been a homeowner’s best friend during very trying times.
Incidentally, right after the news broke about a possible Lawsky departure, Ocwen’s stock rose.