Ocwen Financial Rope-a-Dopes The Consumer Financial Protection Bureau

Update: On May 10th, 2017 HousingWire reported that the Texas Department of Savings and Mortgage Lending ordered Ocwen to cease acquiring mortgage servicing rights.

Ocwen Mortgage Servicing, once the nations leading non-bank servicer is on the ropes; beaten and battered by the last federal agency with a modicum of concern for Main Streeters: the Consumer Financial Protection Bureau. CFPB has taken the company to task in a federal lawsuit , filed April 20 in Florida, for a whole host of predatory shenanigans that include sloppy collection procedures, inexplicable mathematical calculations on mortgage statements and worse still: improper foreclosures. Some 22 other states have weighed in with their own complaints and youve got to figure they have some serious ammunition when none other than Trump friend and Florida Attorney General, Pam Bondi , has joined the chorus. Many of these regulators have raised serious doubts about whether the company should, in fact, stay in business and when the blunderbuss of lawsuits and enforcement orders was fired off on April 20, Ocwens stock went into what appeared to be a death spiral .

So-called non-bank servicers have become an increasingly prominent presence in the mortgage market after the Big Boy Bankers like Goldman Sachs, JP Morgan and Bank of America either divested themselves or downsized once-lucrative servicing platforms following the 2008 financial apocalypse think foreclosure crisis leaving the terrain to be plowed by companies like Ocwen and Nationstar with major hedge fund/private equity investors.

Ocwen has been in the Octagon with CFPB before. In 2013 they settled a complaint about sloppy and shoddy servicing practices. It cost them 2.2 billion with CFPBs head honcho, Richard Cordray, offering this food for thought: deceptions and shortcuts in mortgage servicing will not be tolerated. Ocwen took advantage of borrowers at every stage of the process.

This time around, though, it seems that Ocwens lawyers are taking to rope-a-doping CFPB and after a few days of taking some heavy body blows and upper cuts they filed a brief, on April 26th , that claimed, lo and behold, that CFPB shouldnt even exist constitutionally speaking in its present configuration. Further still, theyve told the court that a friend in a very high place should be allowed to offer his sentiments on their behalf.

And who is this Mr. Mysterioso?

Well, none other than the guy who sits on the throne at the Department of Justice; none other than Jeff Sessions.

Yes, Jeff Sessions who weighed in not long ago in regards to another case by another non-bank servicer, PHH challenging the constitutionality of CFPB. Sessions feels, like many in the administration, that Cordray has a wee-bit more power than he needs. After all the Elizabeth Warren -inspired agency has worked diligently on behalf of Main Street; not falling in lock-step with other federal agencies forced to drink Wall Streets toxic brew of self-serving Kool-Aid.

Ocwen is in desperation mode and calling on DOJs top cop to help being beat up has a whiff of that old 1950s Abbott and Costello TV show where young, irascible Stinky (always dressed in Lord Fauntleroy attire) bristles at every sleight and threatens to call his big friend (and uncle); the memorable Mike the Cop.

Whether Sessions will be able to provide insights is yet to be decided by the court.

Its been up and down for Florida-based Ocwen Financial, going back to the days when I first made mention of the firm in some 2011 American Banker musings . I followed this up with a three-parter for In These Times 2013-2014 examining, among other things, why Ocwen Knows You re Angry ; why William C Erbey Has Built an Empire Based on Misery (Erbey is no longer Chairman of Ocwen Financial) and why Foreclosure Victims Say Shenanigans Havent Stopped.

This current flurry of regulatory activity couldnt come at a worse time for Ocwen. They were on the road to making amends via promises to be good boys after paying additional settlement bucks to the California Department of Business Oversight and New Yorks Department of Financial Services; the latter poised to lift regulatory shackles that would allow them to freely acquire new mortgage servicing rights (MSRs in the lingo); expanding their base and profit potential.

With an eye towards cleaning up a tarnished image they had secured a few new Board members of a diverse and credible nature; folks like Phyllis R. Caldwell ; a development and economic adviser with impressive government experience. They also launched a feel-good campaign highlighting alleged good deeds like making lots of loan modifications although, daresay, many homeowners didnt share in these good tidings (and complaints kept flooding regulatory agencies).

Rope-a-Doping has given Ocwen some breathing room to try and resuscitate their finances. Emergency CPR came in the guise of New Residential Investment which pledged 425 million upfront and a buy-in amounting to a 4.9 percent equity stake.

How long Ocwens executives continue to sport happy faces may be up to the Federal court and State regulators and as they flail around looking to Jeff Sessions to run interference its clear that theres more at stake then simply their survival. The battle being waged in court is also about whether Main Street Americans will be afforded the same sort of protections that were lavished on the Financial Services Industry after they had crashed the economy. While there was no homeowner bailout there was the establishment of the Consumer Financial Protection Bureau which has risen to the job that they were actually created to do: Consumer Protection.

How long Ocwens executives continue to sport happy faces may be up to the Federal court and State regulators and as they flail around looking to Jeff Sessions to run interference its clear that theres more at stake then simply their survival. The battle being waged in court is also about whether Main Street Americans will be afforded the same sort of protections that were lavished on the Financial Services Industry after they had crashed the economy. While there was no homeowner bailout there was the establishment the Consumer Financial Protection Bureau which has risen to the job that they were actually created to do: Consumer Protection.

FYI: In full disclosure... Ive had my own tussles of a personal nature with Ocwen Servicing.

Joel Sucher is a co-founder of Pacific Street Films (together with Steven Fischler) and has written for a number of platforms including American Banker , In These Times , Huffington Post and Observer. com .