Ocwen Loan Modification Help
Ocwen Financial Corp.’s backdating
of letters rejecting homeowner requests to modify mortgages has
drawn the attention of at least three state attorneys general
who were part of a $2.1 billion agreement to curb the company’s
alleged abuse of borrowers just last year.
The backdating left some consumers with insufficient time
to appeal the denials, according to a letter sent to the loan
servicing company by
Benjamin Lawsky, the head of New York’s
Department of Financial Services.
Ocwen’s actions may have also breached its December accord
with the federal Consumer Financial Protection Bureau and
attorneys general from 49 states.
“We’re monitoring the issue and looking into other issues
as well,” Illinois Attorney General Lisa Madigan’s spokeswoman,
Natalie Bauer, said in a phone interview yesterday. Bauer
declined to describe the other issues being looked at by
Madigan, a Democrat.
Florida Attorney General Pam Bondi, a Republican, and
Iowa’s Tom Miller, a Democrat, are also looking at a potential
breach of the December settlement, spokesmen for those officials
said.
The accord required Ocwen, the biggest non-bank mortgage
servicing business in the U.S., to provide $2.1 billion in
borrower relief, with $125 million of that to compensate people
who lost their homes to foreclosure and the bulk of it in the
form of loan principal forgiveness, according to a CFPB
statement issued in December.
Independent Monitor
Ocwen also consented to the appointment of attorney
Joseph
A. Smith, a former North Carolina banking commissioner, as an
independent monitor of its compliance.
Lawsky said Ocwen backdated thousands of loan modification
denial notices starting in 2012 and continuing into this year,
likely causing “significant harm” to borrowers left with no
time to challenge those determinations.
“The existence and pervasiveness of these issues raise
critical questions about Ocwen’s ability to perform its core
function” of loan servicing, according to Lawsky’s letter,
which was made public two days ago.
His letter was cited by Moody’s Investors Service yesterday
in a decision to downgrade its quality assessment of an Ocwen
unit servicing residential and subprime-residential loans.
Risks Cited
“Both assessments remain on review for further
downgrade,” the ratings company said. Allegations raised in
Lawsky’s letter “raise the risk of actions that restrict
Ocwen’s activities, the levying of of monetary fines against
Ocwen, or additional actions that negatively affect Ocwen’s
servicing stability,” Moody’s said.
Ocwen closed at $19.51 today, down almost 26 percent from
its close on Oct. 20.
Under a consent order signed by U.S. District Judge
Rosemary M. Collyer in
Washington in February, the CFPB could
seek penalties for any violation of the agreement.
David Millar, a spokesman for Atlanta-based Ocwen, said
Oct. 21 that the company deeply regrets the improperly-dated
correspondence that resulted from “errors” in its systems.
Millar, who is affiliated with Sard Verbinnen & Co.,
declined to comment on the consent order.
Smith is due to file a compliance report by the end of this
year.
Matthew Anderson, a spokesman for Lawsky, declined to
comment on the matter. Sam Gilford, a Consumer Financial
Protection Bureau spokesman, also declined to comment.
The case is Consumer Financial Protection Bureau v.
Ocwen
Financial Corp. (OCN), 13-cv-2025, U.S. District Court, District of
Columbia (Washington).
