Mortgage-servicing company Ocwen Financial Corp. is currently investigating an error that led to potentially hundreds of thousands of backdated letters being sent to borrowers. This investigation is in response to a probe by New York’s superintendent of financial services, who claims that the company ignored the “pervasive” problem for months after a whistleblower initially reported the error. Nearly a year later, the issue is finally being addressed.
The letters were sent to borrowers who were in need of loan modifications of who were behind on payments. Since the letters were dated when the company made the decision to write the letter, rather than when it actually was created, the discrepancy prevented borrowers from being able to promptly correct any issues with their loans. By the time the backdated letters were received, it was often too late for them to act within the specified deadline.
While the company claims that many of the letters were backdated only a few days, many more had significantly longer gaps. Thousands, perhaps hundreds of thousands, or borrowers who were late on their payments or under threat of foreclosure received notices from the company too late for them to attempt to remedy the problem.
So far, it has not been shown that the letter-dating errors resulted in any foreclosures. Ocwen is working with an independent firm to ensure that the matter is thoroughly addressed and that all necessary fixes are made.
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