Not all foreclosures are on the up and up

Regulators are investigating a firm that collects mortgage payments after allegations that the firm’s actions are leading to homeowner foreclosures that are not necessary. According to reports, the firm, Ocwen Financial Corp., collects payments from residents in Texas and elsewhere. Investigators say that the firm may have participated in less-than ethical activities, including things such as backdating letters.

The company branded itself as a firm that was more helpful to homeowners in crisis than big banks, but a lawsuit claims the firm is illegally charging high fees in addition to engaging in business practices that are deceptive. According to investigators, there is evidence that the company sent thousands of backdated letters to homeowners. Because the letters were dated in the past, it created the image that homeowners had missed deadlines for filing paperwork to prevent foreclosure.

One couple in another state purchased a home in 2002. In 2011, Ocwen supposedly found an issue regarding missing property tax payments, and the firm added an $18,000 lump sum payment requirement to the couple’s bill. Unsurprisingly, the couple couldn’t make that large payment, and the firm reportedly stopped accepting their regular monthly payments.

The couple, who is still struggling to keep their home, says the firm claims they owe much more than they borrowed, even though they made on-time payments for almost a decade. Ocwen has filed for foreclosure and continues to send the couple large bills, but the couple is fighting back on a legal level.

A number of things can lead to a mortgage default. Individuals may have a sudden job change or crisis that means they struggle for a few months with payments, or paperwork and payments can be mixed up. When this happens, some banks are more aggressive than others in seeking foreclosures, which means homeowners have to be aggressive with legal options to fight for their homes.

Source: Texas Public Radio, “Firm Accused Of Illegal Practices That Push Families Into Foreclosure” Chris Arnold, Nov. 18, 2014