DOJ, CFPB Put Heat on Ocwen

The Justice Department is investigating a recently acquired unit of Ocwen Financial (OCN), the company announced Friday. Meanwhile, Ocwen says it has rebuffed a proposal by the Consumer Financial Protection Bureau and other authorities that it contribute tens of millions of dollars to a consumer relief fund.

The Justice Department issued two civil investigative demands to Homeward Residential on Nov. 30, before Ocwen's purchase of Homeward, Ocwen said Friday.

Justice is investigating whether Homeward, which Ocwen bought in December for roughly $766 million, made false claims in violation of U.S. law as part of its participation in the Home Affordable Modification Program, which sets standards for assistance to borrowers who are struggling to pay their mortgages.

"We were advised by [Homeward] that documents and information have been provided pursuant to these [civil investigative demands]," Ocwen wrote in its latest annual filing with the Securities and Exchange Commission. "The investigation remains open, and we intend to cooperate in the event there are further informational requests."

Separately, on Feb. 26 the CFPB, state attorneys general and the Multi-State Mortgage Committee asked Ocwen to consider a proposal to contribute to "a consumer relief fund that would provide cash payments to borrowers foreclosed upon by Ocwen and varied companies it has acquired," Ocwen said.

"We do not believe such a contribution from us is warranted under the circumstances and have so notified the requesting parties," added Ocwen, which estimated its "maximum liability" under the proposal to be $135 million.

An Ocwen spokesperson did not respond immediately to a request for comment.

In February, Ocwen completed a $2.1 billion purchase of servicing rights from Residential Capital, a former unit of Ally Financial.