By Martin Kidston/Missoula Current
The Division of Banking and Financial Institutions at the Montana Department of Administration joined 21 other states on Thursday in issuing a cease-and-desist order against a mortgage service provider, saying the company has failed to appropriately manage its escrow accounts.
Over the past three years, the Montana Division of Banking and Financial Institutions has handled as many as 16 complaints against Ocwen Loan Servicing, and it has required the company to credit more than $51,000 back to state borrowers.
“Managing borrower funds paid as part of their mortgage payments every month is critical to the business of a servicer,” said Melanie Hall, the state’s banking commissioner. “A company that cannot demonstrate that it can accurately accomplish these basic requirements cannot be allowed to continue to grow and potentially cause harm to additional Montanans.”
The company claims to be one of the largest mortgage companies in the U.S. It handles both traditional and reverse mortgage loans.
As part of that service, Hall said, the company receives borrower mortgage payments and is responsible for timely tax and insurance payments. It must also keep accurate records of all borrower payments and correctly calculate any sum that should be paid into escrow.
The latest cease and desist order prohibits Ocwen from acquiring new mortgage servicing rights until the company is able to establish that it can appropriately manage its Montana escrow accounts.
Gov. Steve Bullock said action by the state had become necessary.
“As Attorney General, I joined with other states in holding the big banks and servicers accountable for abusive practices committed against homeowners,” Bullock said. “This action is necessary to ensure that hardworking Montanans aren’t at risk of losing their homes due to Ocwen error.”
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 on Thursday.
According to the Tampa Bay Times, Wall Street’s mishandling of subprime home loans was a major catalyst of the 2008 financial crisis, in which Ocwen played a roll by scooping up troubled loan portfolios to service.
Hall said her division will focus on assisting borrowers who currently make mortgage payments to Ocwen. The state has established a toll free number that Ocwen borrowers who have experienced problems with payments can call at (800) 914-8423.