Following the passing of her mother in 2021, Tonya Golden and her brother inherited a 1,500-square-foot residence located in Sweet Home, Oregon—a compact community of 10,000 residents in the western part of the state. Golden, who was in her mid-forties at the time, retained legal counsel to manage the estate inheritance and preserve the property as the family's sole real estate asset, according to a lawsuit she initiated against her mortgage servicer earlier in the year.

However, she also confronted a severe domestic health emergency: Her husband suffered a brain aneurysm, leaving him cognitively impaired and incapable of working. Functioning as the primary caregiver for both her spouse and her brother, who battles muscular dystrophy, she eventually fell behind on her mortgage obligations. A breakthrough occurred in early March 2025 when the Oregon Homeowner Assistance Fund granted her $60,000 to liquidate her delinquent balance. Concurrently, Golden’s New Jersey-based mortgage servicer, PHH, executed a loan modification to extend her payment timeline. She strictly adhered to PHH's directives, submitting prompt installments for April, May, and June of 2025 under the revised terms.

Remarkably, by late May 2025, PHH had omitted the application of the $60,000 disbursement—received months prior—to Golden’s ledger and failed to reinstate her loan. Instead, the firm scheduled a foreclosure auction for the property on May 30, 2025. This action was aborted just 48 hours prior to the scheduled event solely because Golden secured a state-issued restraining order. The most recent court documentation associated with Golden’s litigation indicates that the servicer has yet to rectify its ledger discrepancies or excise its default-associated expenses and proprietary legal fees from her outstanding balance. A representative for PHH declined to address the litigation's claims.

The Growing Crisis in Mortgage Servicing

Golden’s ordeal highlights systemic vulnerabilities within the mortgage servicing sector, an administrative debt-collection apparatus responsible for gathering payments from borrowers and remitting the funds to the underlying lenders and financial institutions. The majority of these servicers do not hold ownership stakes in the portfolios they administer. Instead, they collect fees scaled to the volume of their servicing volume and bear no direct exposure to the principal debt if a loan defaults.

Onity, the West Palm Beach-headquartered parent entity of PHH boasting $1.1 billion in revenue, ranks among the top ten non-bank mortgage servicers, overseeing more than one million consumers and a portfolio valued at $340 billion. Figures published by the Consumer Financial Protection Bureau indicate that Onity logged 1,208 mortgage-related consumer grievances during the first nine months of 2026, marking a 51% surge compared to the corresponding timeframe in 2025. While the broader mortgage sector experienced a comparable 49% escalation in grievances, Onity maintains a denser concentration of distressed credit assets than its industry counterparts. Nearly five out of every ten grievances directed at Onity originated from borrowers experiencing payment distress, contrasted with three out of ten for major rivals. Furthermore, the corporation carries an extensive history of regulatory penalties.

Onity has undergone significant transformation over the years, including meaningful enhancements to our operations, technology and systems, and customer service capabilities. — Dico Akseraylian, Senior Vice President of Communications at Onity

Akseraylian added that Onity collaborates with nonprofit housing advisory networks, communicates proactively with consumers facing repayment hardships, has assisted approximately 1.6 million U.S. homeowners in bypassing foreclosure, and has forgiven upwards of $19 billion in housing debt.

Macroeconomic Headwinds and Regulatory Shifts

Broad economic pressures and policy shifts continue to fuel the rise in consumer disputes. Active foreclosures have escalated to 296,000—marking a seven-year peak, per Intercontinental Exchange metrics—propped up by stubborn inflation and a sluggish labor market. Mortgage interest rates recently touched 7.4%, representing a three-year high near multi-decade ceilings, which severely restricts refinancing pathways. Furthermore, policy adjustments enacted over the preceding 18 months have introduced steeper hurdles for distressed borrowers attempting to secure relief on loans backed by the Federal Housing Administration and the Department of Veterans Affairs.

Amid heightened financial vulnerability among low- and middle-income demographics, the Trump administration has significantly curtailed the Consumer Financial Protection Bureau, undercutting its operational impact. Established by Congress in 2010 to curb predatory lending practices, the agency's rollback has transcended active litigation, paralyzing the routine supervisory examinations the CFPB historically utilized to intercept operational failures early.

Prior to 2025, the CFPB typically executed roughly 150 supervisory reviews of financial institutions annually, with dozens focused directly on mortgage servicers, according to a former agency insider. During at least the initial eight months of Donald Trump’s second presidential term, the bureau conducted zero supervisory audits, marking what is widely considered the first total cessation of exams since its inception. Although the bureau reportedly resumed examinations in 2026 with 70 scheduled for the calendar year, there remains no indication that mortgage servicers are being scrutinized. Representatives for the CFPB did not reply to inquiries for comment.

Presently, non-bank financial institutions—which catalyzed the 2008 financial crisis and now control roughly $15 trillion in residential mortgage servicing—operate in a largely unchecked regulatory environment. Non-bank entities such as Onity, Rocket Mortgage, and Pennymac currently handle more than half of all U.S. mortgage servicing, a dramatic climb from just 7% fifteen years prior.

The Erosion of Accountability

Independent housing counselors collaborating with distressed borrowers observe that the looming threat of a CFPB inquiry once compelled servicer representatives to act swiftly. Thomas Griffin, an advisor at the Southern California-based housing agency USA Homeownership Foundation, notes that corporate attitudes shifted drastically once firms realized regulatory oversight had waned. Marc Dann, a former Ohio attorney general who directs a plaintiff-side litigation firm specializing in mortgage disputes, asserts that servicers increasingly disregard the mandatory notice-of-error framework supervised by the CFPB. This framework grants borrowers the right to submit written notifications regarding administrative mistakes, obligating servicers to reply within a 30-day window.

Without the threat of supervisory examinations or major CFPB enforcement actions, servicers calculate that occasionally settling individual client lawsuits is far more economical than maintaining strict compliance, Dann explains.

Compounding the issue, market-driven mechanisms fail to correct these expanding systemic failures because borrowers lack the agency to select their servicer; lenders make that determination instead. This dynamic incentivizes lenders to contract with the lowest-cost servicer available, according to Hope Del Carlo, an Oregon attorney with 26 years of experience representing borrowers.

The Legacy of Ocwen and the Rise of Onity

Established originally under the moniker Ocwen in 1988, Onity was founded by William Erbey, a Harvard MBA graduate and former executive at GE Capital and GE Mortgage Insurance. Under Erbey’s leadership, Ocwen developed a reputation for extreme frugality, demanding 75-hour workweeks and maintaining closed blinds in his Saint Croix office to block out distractions from the Caribbean Sea.

In the wake of the financial collapse, Erbey absorbed four competing servicers to construct a massive subprime mortgage servicing operation that captured Wall Street's attention, achieving an $8-billion market capitalization and turning Erbey into a billionaire. However, Ocwen encountered a severe regulatory wall. In 2013, the CFPB, 49 states, and the District of Columbia penalized Erbey’s enterprise alongside two acquired servicers for misallocating customer funds, levying unauthorized fees, and ignoring loan modifications. Without conceding liability, Ocwen committed to delivering $2 billion in principal reductions alongside $125 million destined for foreclosed borrowers. Subsequent pressure from New York regulators forced Erbey’s resignation and required Ocwen to remit a $100 million civil penalty, plus an additional $50 million directed toward victims of foreclosure.

A 2017 regulatory agreement involving 10 states forced Ocwen to abandon its proprietary RealServicing software, which internal communications characterized as an absolute train wreck plagued by widespread coding errors, according to separate CFPB litigation. Although a federal judge ultimately dismissed the CFPB’s 2017 lawsuit in 2023 on the grounds that its claims were precluded by the 2013 settlement, Ocwen purchased the smaller New Jersey-based servicer PHH in 2018, installing its former CEO, Glen Messina, to direct the combined organization.

Since that merger, the challenged enterprise has experienced volatile profitability, with its market valuation oscillating between $200 million and $300 million over the past five years. Following rebrandings to Onity executed in June 2024 and March 2026, the company has aggressively promoted its integration of artificial intelligence and automation to boost operational efficiency. During an August second-quarter earnings discussion, Messina—whose compensation package totaled $7.6 million in 2025—stated that Onity's AI initiatives have transformed document management and customer engagement.

Widespread Litigation Across the Industry

Ongoing litigation targeting Onity and competing mortgage administrators highlights chronic breakdowns in fundamental administrative duties, such as ledger maintenance and consumer grievance processing. A lawsuit initiated this past spring claims that South Carolina-based Shellpoint Mortgage Servicing—controlled by New York investment firm Rithm Capital and administering nearly $270 billion in mortgages—spent months ignoring a Maryland borrower's written inquiries regarding his loan, in direct violation of state statutes. Shellpoint subsequently informed Maryland regulators that it had already dispatched the required response correspondence.

Additionally, the Washington State Department of Financial Institutions announced in April that it was pursuing a $4.2 million penalty against Newrez, operating under the trade name Shellpoint, for dismissing borrower notices of error and misallocating payments, among other infractions. CFPB metrics indicate that during the first nine months of 2026, Shellpoint delivered prompt replies to merely 80.2% of the 2,836 mortgage complaints it logged, down sharply from a 99.7% compliance rate during the same period in 2025.

A representative for Shellpoint declined to comment on the active Maryland litigation, stating that the firm remains dedicated to observing state and federal legal frameworks while collaborating with Washington state to achieve a mutually agreeable resolution. Shellpoint and Rushmore—a Texas-based servicer administering $55 billion in mortgages now owned by Rocket Companies—both specialize in the high-risk management of distressed debt, a niche known as special servicing.

In a legal complaint filed last year, a North Carolina couple alleged that following the transfer of their mortgage to Rushmore, the enterprise miscalculated their interest obligations utilizing a daily simple interest methodology, treating their standard loan like a home equity line of credit. The accounting error generated $53,000 in excess interest charges, and the firm declined to adjust their ledger despite admitting it maintained no record of a HELOC associated with the borrowers.

When the mortgage was transferred again in 2025 to Carrington Mortgage Services, an Anaheim, California-based firm managing $200 billion in loans, the incoming servicer omitted the necessary audit and correction of the historical accounts, according to the lawsuit. Instead, the firm issued a demand for $210,000 in delinquent payments and accumulated fees. The case remains active on the court docket for a 2027 trial. A spokesperson for Rocket declined to comment, while Carrington formally contested the allegations in court documents.

Cory Mayer, a 46-year-old carpenter residing in Santa Cruz County, asserts that Onity subsidiary PHH has failed to correct severe accounting errors on his account spanning more than a decade. Throughout that period, the corporation initiated foreclosure proceedings against him twice, though one attempt was withdrawn following negotiations while the second was blocked via court injunctions.

Earlier this year, Onity took the extraordinary measure of forgiving Mayer’s entire mortgage balance of $628,000—incorporating upwards of $400,000 in remaining principal—ostensibly to compensate him for prolonged administrative distress. Mayer continues to pursue active litigation against Onity centered on breach of contract and ancillary legal violations.