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The CFPB’s Enforcement Case against Ocwen Financial Corporation – 18 Month Checkup


In the spring of last year, the Consumer Financial Protection Bureau (“CFPB”) filed an enforcement action against Ocwen Financial Corporation (“Ocwen”) and its subsidiaries for violation of mortgage servicing rules. The suit was filed in the U.S. District Court for the Southern District of Florida, naming Ocwen and two of its subsidiaries - Ocwen Mortgage Servicing, Inc. and Ocwen Loan Servicing, LLC - as defendants.[1] Close on the heels of that suit, the Attorney General for Florida brought a very similar action against Ocwen and its subsidiaries - filed the same day, in the same court, bearing the very next civil case number.[2] Around the same time, close to half the nation’s state mortgage regulators let loose a coordinated broadside against Ocwen:

     …22 state mortgage regulators… issued public regulatory orders or charges to subsidiaries of Ocwen... to address violations of state and federal laws, including the mishandling of consumer escrow accounts, unlicensed activity, and a deficient financial condition. The majority of the orders prohibit the acquisition of mortgage servicing rights and the origination of mortgage loans until the company is able to prove it can appropriately manage its existing mortgage escrow accounts. The orders are the culmination of several years of examinations and monitoring by multiple state regulatory agencies that revealed the company is mismanaging consumer mortgage escrow accounts.[3]

Subsequently, other state regulators piled on, with 31 states in the mix by year-end.

A year ago, I provided an analysis of the CFPB v. Ocwen enforcement case - where the case stood five months in - and, in this analysis, I included some background information on the mortgage servicing rules at issue, the rise of the nonbanks in the mortgage servicer arena, and Ocwen’s dramatic growth in recent years.[4] If you’re not already familiar with the details of the CFPB v. Ocwen case and its background, I recommend clicking the link for the previous article

The purpose of this particular article is to highlight some of the developments surrounding the CFPB v. Ocwen case since my post last September. A year ago, there were 46 entries on the case docket. As of the date of this post, there are 175 entries. Many of these entries relate to discovery issues, notice of attorney appearances and procedural housekeeping matters. Not that they’re not relevant (for instance, there was a motion to intervene/certify class filed 02/27/2018 that was just denied by the court 09/27/2018), but it would be mind-numbing to try and summarize the motions, orders and other filings corresponding with these entries. Rather, I’m going to focus on three developments since late September 2017 which - singly and collectively - stand to have considerable influence on the course of the case. They are: the D.C. Circuit’s decision in January on the constitutionality of the CFPB; Mulvaney’s ratification of the CFPB’s position in the Ocwen enforcement case; and Ocwen’s settlement with state mortgage regulators over the past year.

To read full article, click here.

[1] CFPB v. Ocwen Financial Corporation et al, U.S. District Court for the Southern District of Fla., Case No. 9:17-CV-80495 (filed 04/20/2017)
[2] Office of the Attorney General et al v. Ocwen Financial Corporation et al, U.S. District Court for the Southern District of Fla., Case No. 9:17-CV-80496
[3]Conference of State Bank Supervisors 4/20/17 Media Release-https://www.csbs.org/state-regulators-issue-cease-and-desist-orders-subsidiaries-ocwen-financial-corp
[4] Link to 9/21/17 article: insights/update-on-the-cfpbs-enforcement-case-against-ocwen-financial-corporation

Brooks Bossong focuses his practice on banking law, credit union law, creditors' rights/special assets, regulatory/compliance issues and commercial litigation. Brooks has a statewide practice in which he represents a variety of financial institutions and business lenders.

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