Ocwen Financial, the embattled mortgage company, joins the long list of critics of the Consumer Financial Protection Bureau.
Former President Barack Obama created the CFPB as part of an initiative to reign in a financial industry that had gone off the rails. Conservatives and Wall Street have repeatedly bashed the CFPB as an anti-business agency, and there’s speculation that it won’t survive President Donald Trump.
“Ocwen believes that the CFPB is unconstitutionally structured because it vests too much unfettered power in the hands of the CFPB’s director and the bureau itself, without any meaningful oversight by the president or Congress,” Ocwen said in a statement.
Last week, shares of West Palm Beach-based Ocwen cratered after states and the CFPB launched enforcement actions against the company, which for years has been the subject of complaints about bogus foreclosures and shoddy practices.
“The Bureau alleges that Ocwen’s years of widespread errors, shortcuts, and runarounds cost some borrowers money and others their homes,” the CFPB said. “Ocwen allegedly botched basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance.”
Ocwen says the CFPB is overreaching, and the company points to Trump’s unenthusiastic view of the agency as a motive.
“Ocwen gave its full cooperation to CFPB,” the company said in a court filing. “However, in the wake of the election of the new president, CFPB pressured Ocwen to resolve the matter on the basis of wholly unreasonable settlement terms. When Ocwen refused to do so, this lawsuit followed.”
Even if Ocwen defeats the CFPB action on grounds of constitutionality, the company faces other regulatory problems. Florida Attorney General Pam Bondi also filed a suit last week making similar allegations against Ocwen. She’s a conservative and, presumably, no fan of the CFPB.
In another action released last week, North Carolina’s banking examiner led a 20-state cease-and-desist order that barred Ocwen from taking on new business. In the order, North Carolina Commissioner of Banks Ray Grace said he and other state regulators insisted that Ocwen reconcile escrow accounts for 2.5 million homeowners.
Ocwen’s response? Doing so would cost $1.5 billion. But Ocwen did offer to reconcile 457 accounts, a fraction of a fraction of a percent of the loans it services.
“Ocwen has consistently failed to correct deficient business practices that cause harm to borrowers,” Grace said in a statement. “We cannot allow this to continue.”
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