Ocwen: CFPB enforcement action should be thrown out because federal agency is “unconstitutional”


Ocwen’s West Palm Beach office. Photo by Gary Coronado/The Palm Beach Post.

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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Billionaire Wilbur Ross quits Ocwen board

Ocwen spinoff says federal agency considering enforcement action

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Ocwen CEO’s pay nearly doubles in 2016


Bristol condo in West Palm Beach lands $200 million construction loan

The Bristol condominium

Now that sales at The Bristol condo in West Palm Beach have topped $300 million, the project’s developer has closed on a $206 million construction loan.

Flagler Investors LLC took the hefty mortgage from BREDS III Loan Holdings Inc., according to public records.

The Bristol is the priciest condo in Palm Beach County history, and it’s proving that wealthy buyers are willing to pay astronomical prices for units on the poor side of the Intracoastal Waterway.

Units range from $1,500 to more than $2,500 per square foot. The typical unit The Bristol is 4,500 square feet and costs $10 million.

The property is just south of downtown at 1112 S. Flagler Drive.



Ocwen slammed by Treasury’s special inspector

012210 met ocwen 1.jpg

Ocwen Financial Group long has been a punching bag for regulators, and the West Palm Beach-based loan servicer finds itself taken to task again in a quarterly report from the U.S. Treasury Department’s Special Inspector General for the Troubled Asset Relief Program.

Released Friday, the report’s summary of Ocwen’s performance spans just over a page, and includes nine uses of “wrongfully,” along with one instance each of “improperly,” “misconduct” and “mismanagement.” Among the findings:

“Treasury continued to find in 2014 through 2016 that Ocwen wrongfully cancelled homeowners out of [the Home Affordable Mortgage Program]. More than 127,000 homeowners who were in a HAMP modification with Ocwen have fallen out of HAMP. Ocwen was paid in excess of $725 million through HAMP for these cancelled homeowners. More than 30,000 of these homeowners went into foreclosure or otherwise lost their home.”

“Treasury has found that Ocwen wrongfully cancelled people out of HAMP based on Ocwen’s own misconduct similar to the conduct in Ocwen’s enforcement action. Ocwen cancelled homeowners out of HAMP finding that they had missed three payments, when in reality homeowners made the payments, but Ocwen held mortgage payments in suspense, improperly reversed and later reapplied mortgage payments, and did not timely post payments made to an Ocwen lockbox. Treasury does not know how many homeowners Ocwen has wrongfully cancelled out of HAMP.

“Ocwen’s denial of 68 percent of those who applied for HAMP should be looked at through the lens of the enforcement action which found that Ocwen ‘improperly denied loan modifications.’”

“With Treasury contracted to pay up to another scheduled $2.2 billion and possibly an additional $941 million to Ocwen, continued oversight over these billions of dollars and this program remains critical.”

UPDATE: Ocwen offers this statement:

“Ocwen led the industry in HAMP modifications during the life of the program, and we are extremely proud of our performance and our success. As of September 2016, Ocwen has helped 330,000 struggling borrowers remain in their homes under the HAMP program. We took our participation in the HAMP program very seriously and made significant investments in our risk and compliance management infrastructure in that time.

Under the umbrella of The U.S. Department of the Treasury, we believe the HAMP program has been successful in keeping borrowers in their homes and has executed rigorous oversight over servicers.  

We remain committed to working with distressed borrowers to find the right loan modification to allow them to keep their homes while continuing to provide cash flow for loan investors. There is no doubt that a homeowner whose loan is serviced by Ocwen has a much better chance of avoiding foreclosure than if their loan is serviced by any other large mortgage servicer. This has been confirmed by independent third-party studies, which consistently illustrate that Ocwen has a superior record helping borrowers bring their payments current, stay current, and repay their mortgage. This is a record we are proud of.”

Tab for Trump’s FHA reversal? About $540 a year for typical borrower in Palm Beach County


In the waning days of the Obama administration, the U.S. Department of Housing and Urban Development announced a plan to cut mortgage insurance costs for homeowners with Federal Housing Administration loans. And in the opening hours of the Trump administration, HUD reversed course.

The rate cut would have saved $540 a year for the typical FHA borrower in Palm Beach County. But, with memories of the mortgage meltdown still fresh, Congressional Republicans worried that the move would shift risk from private borrowers onto taxpayers.

Because FHA loans are easy to qualify for, they’ve become a staple for first-time buyers. FHA loans require down payments of only 3.5 percent (compared to 20 percent for the standard mortgage), and they’re offered to borrowers with credit scores as low as 580 (well below the 740 level required for most Fannie Mae and Freddie Mac loans).

The downside? Borrowers must pay hefty premiums for mortgage insurance, coverage that protects the lender in the event of default. Hence HUD’s announcement earlier this month that it would shave 0.25 percent from mortgage insurance premiums starting Jan. 27.

According to an analysis by ATTOM Data Solutions, the typical FHA borrower in Palm Beach County has a loan amount of $216,000. The 0.25-point cut would have saved that borrower $540 a year.

Because of the high mortgage insurance costs, FHA borrowers typically aim to boost their credit scores and build enough equity to refinance into a less expensive loan.

FHA mortgage insurance premiums to fall


Mortgage rates have been on the rise, but the U.S. Department of Housing and Urban Development said Monday that it will cut mortgage insurance premiums on Federal Housing Administration loans.

The reduction of 0.25 percent would mean $500 in annual savings for a borrower with a $200,000 loan. The lower premiums take effect Jan. 27, HUD said.

FHA loans have become popular in recent years because they require low down payments and only mediocre credit scores. But because those factors mean FHA loans pose a higher risk of default, borrowers must pay higher rates for mortgage insurance, which protects the lender against default.

After post-Trump spike, mortgage rates might hold steady in 2017


Mortgage rates plunged after last summer’s Brexit vote, then soared after Donald Trump’s win on Nov. 8. After bottoming out at 3.41 percent last summer, the 30-year fixed settled in at 4.2 percent as of Thursday, according to Freddie Mac.

The volatility should ease in 2017, experts predict. They forecast rates in the 4.5 percent to 4.7 percent range by the end of the year. The prognostications:

  • Greg McBride, Bankrate.com’s chief financial analyst, says the 30-year fixed will spend the year moving between 4 percent and 4.5 percent.
  • The Mortgage Bankers Association predicts that the 30-year fixed-rate mortgage will rise to 4.3 percent this quarter and 4.7 percent by the end of 2017.
  • The National Association of Realtors expects rates to climb to 4.6 percent at the end of this year.

At 4 percent, a 30-year mortgage for $200,000 will cost you $955 a month. At 4.5 percent, payments on a loan for the same amount jumps to $1,013.

Expect only modest increases in mortgage rates, experts say


Predicting the future of mortgage rates is a notoriously tricky business, but the consensus seems to be that rates will rise gradually in the coming months.

The 30-year fixed-rate mortgage averaged 4.13 percent as of Dec. 8, according to Freddie Mac. What next?

Redfin, the Seattle-based brokerage, predicts rates will top out at 4.3 percent in 2017. Realtor.com Chief Economist Jonathan Smoke offers a similar forecast.

“Rates will likely stay the same until about March, so buyers considering a purchase in 2017 may want to consider getting into the market now,” Smoke says.

Fannie Mae, Freddie Mac boost conforming loan limits for first time in years


The limit for a so-called conforming mortgage will increase to $424,100 from $417,000 in 2017, the Federal Housing Finance Agency said Wednesday.

It’s the first time since 2006 that the feds have raised the mortgage cap that applies to much of the United States, including Palm Beach County. In the priciest housing markets, such as San Francisco, the federal loan limit rises to $636,150 from $625,500.

Borrowing more than the loan limit requires a jumbo loan, which typically carry higher interest rates and stricter underwriting guidelines than conforming loans.

Palm Beach County’s underwater borrowers coming up for air


Back in the bad old days of the housing crash, nearly half of Palm Beach County homeowners owed more than their homes were worth.

Now, that level has fallen to just 10.2 percent, Zillow said Thursday. For homeowners who are back above water, the newfound equity offers all sorts of new options, including the ability to refinance a mortgage or to sell.

Palm Beach County’s underwater homeowners continue to come up for air


Palm Beach County homeowners continue to emerge from a long session of waterboarding. Just 16 percent of county homeowners are “seriously underwater” as of mid-2016, according to a RealtyTrac report released Thursday.

The seriously underwater figure — meaning loan values of at least 25 percent more than home value — was 20 percent as of mid-2015. During the darkest days of the housing crash, nearly half of Palm Beach County borrowers were way upside down.

Meanwhile, 26 percent of Palm Beach County homeowners are “equity rich,” meaning they have loan-to-value ratios of 50 percent or less. That’s up from 21 percent a year ago.

Cities with the most seriously underwater properties were Cleveland (27.5 percent) and Las Vegas (25.7 percent).

Metro areas with the lowest share of seriously underwater properties were San Jose, California (1.7 percent), and San Francisco (3.7 percent).