Bank regulators in New York are accusing the nation's largest subprime mortgage lender of errors that might have harmed hundreds of thousands of borrowers.
New York's Department of Financial Services accuses Ocwen Financial of backdating letters warning of foreclosure or unsuccessful loan modifications. This means that by the time a borrower receives a letter from Ocwen, it's already too late to do anything about it.
Housing advocates say it is not uncommon for loan servicers to make mistakes in foreclosures or modification applications.
"And if a borrower doesn't have a chance to dispute that, then the denial is going to stand and they very well may end up losing their home," says Lisa Sitkin, a lawyer for the nonprofit Housing & Economic Rights Advocates.
In a statement, Ocwen attributes the problem to a software error. According to regulators, Ocwen was warned repeatedly for over a year that they were misdating letters.
This is the second investigation into Ocwen's books in the last three months. Regulators are also investigating if Ocwen has taken inappropriate kickbacks for homeowners insurance.
