Federal and state regulators unleashed a fusillade of lawsuits and enforcement orders Thursday against Ocwen Financial Corp., a large mortgage servicer, aimed at curbing what they said had been years of flagrant and repeated abuses, including illegal foreclosures, deceptive fees and extensive mishandling of customers’ home-loan payments.
Some of the regulatory orders directly questioned Ocwen’s ability to continue operating.
The market responded accordingly: Shares of the company fell 54 percent, closing at $2.49 a share.
Twenty-two state mortgage regulators filed enforcement orders intended to limit or freeze Ocwen’s ability to acquire new mortgage loans to service in their states.
Servicing a loan involves billing customers and funneling payments to the lender; Ocwen, which is not a bank, specializes in doing so for subprime mortgages — home loans issued to people with less-than-stellar credit.
Hawaii is among the states threatening to prohibit Ocwen from acquiring new business.
The state Division of Financial Institutions said it had 10 complaints against the company between January 2013 and February 2015 which included inaccurate escrow accounts, forced insurance coverage and incorrect property tax payments.
Ocwen has 15 days to request a hearing under Hawaii law.
Wall Street’s mishandling of subprime home loans was a major catalyst of the 2008 financial crisis, in which Ocwen was a player, scooping up troubled loan portfolios to service. But the latest round of accusations stems from activity in recent years.
In a statement, Ocwen said it was “proud of its corporatewide commitment to a culture of integrity, transparency, compliance and service.”
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