Complaint Review: Ocwen

Kudos and a huge thank you to American Banker magazine and Mr. Erick Bergquist for daring to expose the dirt that Ocwen fights so hard to keep hidden!

And some thoughts of my own: Ocwen again hides behind its Federal charter and "all the oversight" from the OTS. LOL. That old dog don't hunt no more!

Fitch did not downgrade Fairbanks until a huge public stink had been made. Who does Fitch work for? Hint: it ain't you and me, consumers!

"Fitch is looking for Fairbanks-like problems", sure it is. NOW! What bushel did Fitch have its head under all this time?

Fitch should read Rip-offReport.com! It would save them all that hard work "searching" for problems. It's all right here in black and white.

I think I smell a downgrade in the making.
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Some Fairbanks Critics Now Focusing on Ocwen Financial

American Banker Monday, November 17, 2003

By Erick Bergquist

Now that Fairbanks Capital Corp. has settled with federal regulators, consumer activists and class action lawyers are focusing on another subprime servicer, Ocwen Financial Corp.

They accuse Ocwen of abuses such as unnecessary forced insurance and excessive fees similar to those allegedly committed by Fairbanks, the Salt Lake City firm that the Federal Trade Commission and Department of Housing and Urban Development jointly investigated this year.

Lieff, Cabraser, Heimann & Bernstein LLP filed a complaint last month against Ocwen, of West Palm Beach, Fla. The San Francisco law firm was a co-lead counsel in a consolidated class action against Fairbanks that was covered by the federal settlement.

Daniel J. Mulligan, a partner with the San Francisco firm Jenkins & Mulligan, another co-lead counsel in the consolidated Fairbanks case, said he plans to file a class action complaint against Ocwen in a California court this week. The complaint will expand on one he filed in December of last year, with additional allegations against Ocwen.

Ocwen was the fifth-largest subprime servicer at midyear, with $33.5 billion, according to National Mortgage News.

Ocwen would not make executives available for interviews. But Robert Napoli, an analyst with U.S. Bancorp Piper Jaffray in Chicago, said executives at Ocwen have told him there are several key differences between their company and Fairbanks.

Ocwen services loans through a federally chartered thrift subsidiary, which is regulated by the Office of Thrift Supervision. For this reason, "there is a lot more review going on than there was at Fairbanks," Mr. Napoli said.

Also, Mr. Napoli said, Ocwen officials told him that the company has not grown as quickly as Fairbanks in recent years. Fairbanks has said rapid growth was one reason for its problems.

And Ocwen has not been downgraded by any of the ratings agencies, its executives pointed out to Mr. Napoli. Fairbanks was downgraded by all three agencies in May and has been unable to take on new servicing business since then.

Fitch Inc.'s last report on Ocwen came out last December, before the problems with Fairbanks surfaced. Ocwen got Fitch's fourth-highest rating, "level two," for ability to service subprime and distressed loans. The reason, said Kathleen Tilwitz, an analyst at the agency, was financial difficulty.

Fitch is now evaluating the company for its annual review and will issue a new rating within 30 days, Ms. Tilwitz said. "We have been in there within the last month, and we have been informed about" allegations of predatory servicing similar to the complaints about Fairbanks, she said.

Fitch is looking for Fairbanks-like problems at all the servicers it is reviewing, Ms. Tilwitz said.

Josh Zinner, the director of the nonprofit South Brooklyn Legal Services/Foreclosure Prevention Project, said the "fundamental problem with subprime servicers" is that as contractors for Wall Street bond issuers they do not answer to consumers."

In a normal marketplace, if a company has abusive or obnoxious customer service, they are not going to get any business," Mr. Zinner said. "But with these contract servicers, the customers have no choice about who services their loans, so there is no incentive to work with customers in a reasonable way, only to maximize collections with aggressive practices."

Brigitte Amiri, a staff attorney at South Brooklyn Legal Services, said that Ocwen often charges customers more than once for the same service when they refinance.

When one of her clients refinanced into a reverse mortgage, she said, Ocwen charged the new mortgage holder - not the borrower - more than $1,000 in repetitive fees. That would have cut the borrower's refi proceeds.

Ocwen listed four different fees - a legal fee, a foreclosure fee, an attorney's fee, and a disbursement fee - all for the same service, Ms. Amiri said. Ocwen corrected the overcharges, but her colleagues at South Brooklyn told her Ocwen did the same thing to their clients.

Robin
Waldron, Arkansas
U.S.A.

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