Ocwen agrees to refund Maine residents to end foreclosure dispute with the state

Will pay to make amends for pursuing foreclosure on loans for which Maine said it had no claim

Ocwen Financial signed a consent agreement with the state of Maine last week to make amends for pursuing foreclosures on the properties of more than two dozen Maine residents in a manner found to be unlawful by the state.

According to the Maine Bureau of Consumer Credit Protection, Ocwen Loan Servicing instigated foreclosures on loans based on paperwork that was determined to be legally inaccurate.

The loans in question were part of a portfolio of mortgage servicing rights that Ocwen purchased from Aegis Mortgage, which was mired in bankruptcy proceedings at the time. According to the consent agreement, the Power of Attorney over the loans that were in the Aegis portfolio ceased to exist when the entity was dissolved in November 2012. But in 2014, Ocwen filed foreclosure notices against a number of Maine borrowers on behalf of Aegis Lending and Aegis Funding as its “Attorney in Fact,” when in reality Aegis Mortgage and all of its subsidiaries were already defunct, which also meant that any of its claims also ceased to exist.

According to the consent agreement, Ocwen “had no authority to execute documents as an ‘Attorney in Fact’ for legal entitles which have had no corporate existence since March 13, 2012.”

Furthermore, even after state regulators brought the error to Ocwen’s attention in 2019 and its lawyers assured regulators the practice would stop, the illegal filings continued into January of 2019, an error the company defined as “inadvertent,” according to a release issued by the state of Maine.

For its part, Ocwen said the settlement is not an admittance of wrongdoing, and insisted that the company had a sound legal basis for using Power of Attorney in the foreclosure actions.

“This is a procedural matter regarding the process the state of Maine uses for assignment of mortgages in foreclosure actions and has no bearing whatsoever on the underlying substantive merits of the foreclosure actions themselves,” the spokesperson told HousingWire.

The spokesperson also noted that Ocwen “took the necessary steps to determine a solution that addresses the allegations by the state of Maine with respect to the assignment of mortgages, which may benefit other mortgage servicers in the future.”

Objections aside, Ocwen “agreed to resolve the matter to avoid the distraction and expense of litigation,” the spokesperson said.

To put the issue to rest, Ocwen has agreed with Maine’s attorney general and consumer bureau to make amends in a deal that will have the company pay more than $50,000 in attorney fees for the borrowers it pursued, $24,000 in civil penalties, and $10,000 in investigative costs to the state.

“Maine’s Supreme Court has made clear that lenders must establish that they have the legal right to pursue foreclosures,” said Will Lund, superintendent of the Maine Bureau of Consumer Credit Protection. “Those requirements were not followed in these cases.”

Attorney General Aaron Frey said the agreement is a warning for other mortgage companies.

“The consent agreement puts Ocwen – and other national mortgage lenders and servicers – on notice that they must follow the legal standards here in Maine if they pursue actions on defaulted mortgages,” Frey said.

Ocwen Consumer Settlement

August 6, 2019

STATE OF MAINE DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION BUREAU OF CONSUMER CREDIT PROTECTION 35 STATE HOUSE STATION AUGUSTA, MAINE 04333-0035

August 6, 2019

FOR IMMEDIATE RELEASE

Contact: William N. Lund (Bureau of Consumer Credit Protection), (207) 624-8527, William.N.Lund@Maine.gov Marc Malon (Office of Attorney General), (207) 626-8887, marc.malon@maine.gov

Loan Servicer Ceases Foreclosures Found by Maine to be Wrongful

Settlement Includes Consumer Refunds, Penalties

AUGUSTA – Ocwen Financial Corporation will refund or credit 24 Maine residents more than $50,000 in attorney’s fees they were assessed when their homes were foreclosed upon, and the company will pay $24,000 in civil penalties and $10,000 in investigative costs to the State of Maine, as part of a Consent Agreement signed last week.

Ocwen is a national provider of loan servicing for lenders. It is headquartered in Florida and has offices in several states. In its Consent Agreement with Maines Bureau of Consumer Credit Protection and Attorney General, Ocwen admitted that after July 2014 it pursued foreclosures against Maine homeowners based on paperwork which the State found to be legally defective.

Specifically, Ocwen used “powers of attorney” granted by corporate originators of the mortgages, but those corporate originators of the mortgages had been legally dissolved – had ceased to exist no later than March 2012. The State alleges that the powers of attorney terminated when the granting corporations dissolved.

Under the Consent Agreement, the State found that Ocwens use of the powers of attorneys from legally nonexistent entities violated a statute prohibiting false, deceptive or misleading representation or means in the collection of any debt.

Ocwens illegal filings continued into January of 2019, even after Ocwens lawyers had assured State regulators in November 2018 that the practice would stop. The company termed the additional filings as inadvertent.

Maines Supreme Court has made clear that lenders must establish that they have the legal right to pursue foreclosures, said Will Lund, Superintendent of the Maine Bureau of Consumer Credit Protection. Those requirements were not followed in these cases.

Attorney General Aaron M. Frey, whose office assisted state mortgage regulators in negotiating and resolving the matter, stated, The Consent Agreement puts Ocwen and other national mortgage lenders and servicers on notice that they must follow the legal standards here in Maine if they pursue actions on defaulted mortgages.

The Consent Agreement may have ramifications beyond Ocwen, noted Superintendent Lund, since other lenders may be filing foreclosures based on similar powers of attorney issued by the same nonexistent corporate loan originators used by Ocwen.