In the midst of its own regulatory war, Ocwen Financial Corp. is accusing Fidelity Information Services LLC of fraudulent over billing for work required under a settlement with California.
Subsidiary-Ocwen Loan Servicing LLC filed a complaint in a California superior court against Jacksonville, Florida-based FIS, according to a copy of the complaint provided by Ocwen.
The lawsuit is related to a 24-month independent servicing review required by the California Department of Business Oversight that was conducted by FIS beginning in June 2015.
That review was required by a $225 million settlement Ocwen reached with the state to avoid the suspension of its mortgage licenses in California.
Ocwen claims that even though FIS was retained to review 50,000 loan files at a budgeted cost of $44.8 million — FIS burned through the entire $44.8 million budget in the first 11 months and was on a trajectory to reach $120 million.
FIS is accused
of fraudulently billing Ocwen for work it never did.
“Throughout the engagement, FIS made fraudulent or negligent misrepresentations in its monthly invoices to Ocwen about the services FIS claims to have performed and the expenses FIS claims to have incurred,” the complaint states. “Whenever Ocwen questioned the legitimacy of FIS’ invoices, or confronted FIS about their increasing enormity, FIS reiterated its misrepresentations that the hours and expenses reflected on the invoices were legitimately worked and incurred. By continuing to represent to Ocwen that its invoices were legitimate, FIS induced Ocwen to continue to pay millions of dollars for work that was not performed. FIS did so because it was incentivized to, and because it perceived that it had free reign to lie to Ocwen without consequence.”
Ocwen cited $2 million billed by FIS for loan file reviews during a month when no reviews were completed. Some of the time sheets were implausible, Ocwen said, reflecting 16-hour days for months at a time.
The lawsuit alleges that Ocwen was billed for every minute FIS associates were at its office even though they took breaks as often as 14 times a day. Some associates were allegedly observed watching videos instead of working.
Through a new agreement with the state, Ocwen terminated FIS’ services on Feb. 17.
For its part, FIS is not taking Ocwen litigious assault lying down.
“The complaint filed by Ocwen Loan Servicing against FIS is completely baseless and we plan to defend ourselves vigorously against these false allegations and to pursue collection of the invoices this litigation was filed to avoid,” the mortgage service provider said in a written statement.
Ocwen’s lawsuit against FIS comes as the company, itself, is under siege by multiple states and the Consumer Financial Protection Bureau over its servicing practices. The CFPB has filed a lawsuit against Ocwen, while some states have issued orders against the servicer, and others have filed their own lawsuits.
