Ocwen adds new charges to FIS lawsuit, expands audit abuse claims

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Ocwen Financial Corp. has added new claims to its lawsuit against Fidelity Information Services alleging in part that FIS misrepresented its qualifications to conduct an audit for which Ocwen had previously accused FIS of overcharging.

The new complaint also alleges that members of Fidelity Information Services' senior ranks, and its parent company, were aware of abuses that Ocwen claims occurred during the audit FIS conducted of Ocwen's mortgage-servicing practices on behalf of the California Department of Business Oversight. According to Ocwen, the new allegations, filed in California's Superior Court in Sacramento, were based on information acquired through the discovery process.

In an emailed statement, an FIS spokesman called the amended complaint "without merit" and said the company planned “to defend [itself] vigorously against these allegations."
In the complaint, Ocwen specifically alleges that FIS represented to the California DBO that it had a proprietary data-based analytical tool it could use to audit Ocwen on the regulator's behalf in June 2015.

But according to notes Ocwen said it obtained in the discovery process, FIS did not actually develop the tool until later.

Ocwen's amended complaint relies heavily on information from two employees who have since resigned from the company: Cynthia Treadwell, former director of compliance consulting at FIS, and Sharon Blanchette, a former director of risk management.

"[We] basically lied to get this … work," according to a handwritten series of notes attributed to Treadwell in the complaint.

Ocwen's exhibit included a further quote from the notes: "The DBO cannot understand why we do not have push-button capability for a statistical report from the servicing analyzer tool. Because tool did not exist until 6 mos.+ into the project."

The amended complaint adds to claims in Ocwen's original lawsuit that accused FIS employees of padding timesheets and filing inappropriate expenses. Ocwen paid more than $50 million for the FIS audit and is seeking, at a minimum, to recover those expenses in the lawsuit.

In an emailed statement, Ocwen spokesman John Lovallo alleged, “Since Ocwen’s original filing in May 2017, discovery in this case has established that Fidelity Information Services’ misconduct was much worse and more pervasive than Ocwen ever imagined. Our amended complaint adds new fraud claims and names FIS’ parent company, publicly-traded Fidelity National Information Services, as a defendant. Fidelity National not only knew about the fraud, but facilitated it to increase their financial performance. Ocwen will continue to vigorously pursue all remedies stemming from FIS’s fraudulent and abusive billing scheme to hold FIS and Fidelity National fully accountable for their actions."

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Lawsuits Servicing Compliance reviews State regulators Ocwen Financial FIS California
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