Mortgage Giant Accused Of Faking Documents To Justify Foreclosures

http://thinkprogress.org/economy/2014/10/23/3583350/ocwen-faked-documents-lawsky/

by Alan Pyke Posted on October 23, 2014

New York state’s top financial regulator says one of the biggest mortgage servicing companies in America has continued to backdate paperwork in order to justify illegitimate foreclosures, more than two years after the widespread falsification of key foreclosure documents by financial companies was revealed and quickly resolved through a settlement with the federal government.

New York Department of Financial Services Superintendent Ben Lawsky says that Atlanta-based Ocwen Financial Corporation has been sending letters to homeowners long after deadlines for renegotiating their mortgages had passed. The dates on the letters say that they were sent well ahead of the deadlines, but Lawsky’s investigators say Ocwen’s own systems indicate the documents were created after the fact with incorrect dates printed on them. Worse, Ocwen was alerted to the improperly backdated documents by an employee nearly a year ago, according to the Wall Street Journal, but “ignored them for months and still hasn’t corrected them, nearly a year after they were initially found.”

By failing to provide struggling homeowners with timely information about their options, Lawsky’s investigation has found, Ocwen deprived thousands of people the opportunity to renegotiate their mortgages and improve their chances of keeping their homes. The new allegations are “the sixth time in the past two years that Mr. Lawsky’s office had raised questions about Ocwen’s business practices,” the Journal notes. The company’s stock price has fallen by more than half since the start of the year.

The newest alleged violations at Ocwen, which is the fourth-largest mortgage servicing company nationwide, share DNA with the widespread document falsification scandal that was dubbed “robo-signing” when it broke into headlines in 2010. The term refers to an illegitimate business practice whereby financial companies hired people to sign documents without actually verifying any of the information they contained.

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Two and a half years after the federal settlement was announced, state regulators are still uncovering systematic falsification of documents by companies that made money foreclosing on borrowers who had their legal rights violated. Lawsky’s letter to Ocwen says that the newly-discovered backdating affected “potentially hundreds of thousands of letters to borrowers” and that the company’s shoddy internal systems mean that “it may be impossible to determine the scope of Ocwen’s non-compliance” with foreclosure laws. It also says that Ocwen’s inappropriate documentary practices have continued into 2014.

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