Despite Settlement, Complaints Against Ocwen Continue

On December 19, 2013 the Consumer Financial Protection Bureau, 49 state attorneys general, and the District of Columbia reached a settlement agreement with Ocwen to resolve the company’s illegal foreclosure practices. The settlement allowed Ocwen to escape prosecution in return for a promise to cease at least 17 illegal practices it used to over-charge and mislead homeowners, to file false documents, and to wrongfully foreclose.

So has Ocwen lived up to its promise of change?

Data compiled by the CFPB shows that in the months after the settlement was announced there was actually a spike in the number of complaints against Ocwen. So far this month complaints against Ocwen are down, but overall, based on consumer complaint data, it’s hard to see how the settlement has changed Ocwen’s practices.

The following graph shows the number of complains received by the CFPB every day against Ocwen, starting on December 1, 2011 and ending on July 16, 2014. The red arrow points to the day that the Ocwen settlement was announced by authorities. The black trend line shows generally that complaints against Ocwen have continued to rise over time.

 

Banker Pay Compared to the National Mortgage Settlement

Citibank’s Michael Corbat, 2nd highest paid banker on the list.

In 2013 the top 27 executives at Bank of America, Wells Fargo, JPMorgan Chase, Citibank, and Ally —the five big financial institutions most responsible for the foreclosure crisis, and subject to the National Mortgage Settlement— paid themselves $296 million in cash and stock. Under the National Mortgage Settlement these banks were forced to write down principal debt on home loans in California. The average principal reduction they granted on 1st lien loans was about $137,000. 33,000 California borrowers benefited from this.

Had the banks applied the $296 million to further principal reduction, instead of using it to pay their top 27 executives, they could have wiped out debt on another 2,164 home loans, effectively saving about that many homes from foreclosure.

And if the banks applied the same sum they paid to their top 27 executives over the past 3 years (2011-2013), a total of $735 million, the could have reduced the 1st lien principal debt on 5,367 homes in California.

To put that in perspective, there were about 31,400 foreclosures in California in 2013, and 283,000 foreclosures between 2011 and 2013. It would have made a small, but significant, contribution to reducing the number of foreclosures and freeing up the finances of thousands of struggling households.

But instead the banks paid their CEOs, CFOs, COOs, VPs and Presidents millions. Average pay in 2011 for these bankers was $11 million each. Wells Fargo’s CEO John Stumpf led the list with over $19 million in compensation in 2013, followed Citibank executives Michael Corbat and James Forese. Three of JPMorgan Chase’s bankers (none of them the infamous Jamie Dimon) followed in the 4th, 5th, and 6th position pulling $16 and $17 million salaries and stock grants.

In 2014 the pay for these 27 executives, whose compensation is public record, will most likely be up yet again, easily topping $300,000,000.

Dianne Feinstein Mixes Money With Oakland Foreclosure Investor

Richard C. Blum and Dianne Feinstein enjoying a chuckle.

Last month I published an investigation examining the big corporate investors that have bought up the East Bay’s foreclosed homes, turning thousands of them into rental properties. Featured in the story was Cheri King, an Oakland resident who lost her house due to predatory bank lending and the foreclosure crisis. Now her home in East Oakland is owned by Colony Capital, a private equity firm from Santa Monica run by billionaire Thomas Barrack, Jr.

Last Friday it was announced that a hotel chain owned by Barrack, FRHI Hotels & Resorts, purchased Oakland’s Claremont Hotel. Joining Barrack in buying the Claremont is Richard Blum, husband of U.S. Senator Dianne Feinstein.

Here’s what the company’s press release said:

“FRHI Hotels & Resorts (FRHI), the parent company of luxury and upper upscale hotel brands Raffles Hotels & Resorts, Fairmont Hotels & Resorts and Swissôtel Hotels & Resorts, together with California financier Richard C. Blum and his family, have purchased the historic Claremont Hotel Club & Spa in Berkeley, California, it was announced today. FRHI and the Blum family are equal partners and terms were not disclosed.”

Whatever the specific terms were, the general gist is that Blum and Feinstein are now business partners with Barrack.

What does this mean for victims of the foreclosure crisis like Cheri King, and homeowners currently fighting to stop foreclosure? In her effort to stave off foreclosure by Wells Fargo, and win back her home from Colony Capital, King wrote to Senator Feinstein’s office last year. According to King, Feinstein’s staff were responsive and helpful, but ultimately nothing has come of her attempt to bring the California Senator’s attention to the problem of continuing bank foreclosures, dual tracking, and the investors like Colony Capital taking advantage of this situation.

Now that Feinstein is a business partner with one of the largest foreclosure investors in the nation, Colony Capital, will there be a push for more meaningful oversight of the banks that are creating the inventory of empty homes for buyers like Barrack to buy up?