LANSING, MI – To address the mishandling of Michigan consumer escrow accounts and a deficient financial condition, the Michigan Department of Insurance and Financial Services (DIFS) has issued a cease and desist order to Ocwen Loan Servicing, LLC. The order prohibits further violations of the Mortgage Broker, Lender, and Servicer Licensing Act.
“Ocwen has a history of issues involving improper servicing and handling of escrow accounts,” said DIFS Director Patrick McPharlin. “Previous efforts to work with Ocwen to correct these problems have not been successful. That is why Michigan, along with other states, decided it was necessary to take this action.”
Mortgage escrow accounts hold borrower funds that the company is entrusted to manage and are used to pay taxes and insurance. The order is the culmination of several years of examinations and monitoring that revealed Ocwen was unable to accurately reconcile those accounts. In Michigan, Ocwen has had difficulty keeping accurate records and with properly crediting payments, which can cause significant harm to consumers.
The majority of Ocwen’s loan servicing portfolio represents distressed credit, sometimes referred to as troubled borrowers. As a distressed credit servicer, Ocwen holds an increased responsibility for managing accounts where borrowers may have experienced problems arising from questionable loan sales practices.
More than 20 state mortgage regulators have issued regulatory orders or charges to subsidiaries of Ocwen Financial Corporation to address violations of state and federal laws.