Atlanta-based mortgage servicer Ocwen Financial is facing trouble again, this time from a lawsuit accusing the company of illegally marking up its default servicing fees, according to court records.
The civil lawsuit, which was filed in the U.S. District Court, Eastern District of California, as David Weiner vs. Ocwen Financial Corporation and Ocwen Loan Servicing LLC, is seeking class action status.
"This case concerns fraudulent practices committed by Ocwen in connection with its home mortgage loan servicing business," the plaintiff wrote in the complaint. "Taking advantage of the economic downturn and the increasing number of loans in default, Ocwen devised a scheme to deceive homeowners who are behind on their mortgage payments into paying, or believing they have to pay, hundreds or thousands of dollars in unlawfully marked-up fees."
The suit alleges that Ocwen used one of its affiliate companies, Altisource, and third-party vendors to illegally generate "fee income and larger profits for Ocwen and its affiliates."
According to the lawsuit, "Ocwen’s unlawful loan servicing practices exemplify how America’s lending industry has run off the rails."
Ocwen, the nation's largest non-bank mortgage servicer, has come under extreme scrutiny for its practices in the last year. In December 2013, the Consumer Financial Protection Bureau ordered Ocwen to pay $2 billion in relief to underwater borrowers plus $125 million in refunds to foreclosure victims over a series of alleged servicing errors and illegal servicing activities. Last month, the New York Department of Financial Services announced that an investigation of Ocwen revealed that the company had sent 7,000 backdated foreclosure notices to borrowers after their payment deadline had passed.
Also last month, Ocwen executive chairman William Erbey announced that the company was setting aside $100 million for a potential settlement over the backdated foreclosure notices.