Ocwen settles with more states to relax mortgage servicing restrictions

On Thursday, the states of Illinois and Montana separately announced that each state reached a consent agreement with Ocwen Financial that removes some of restrictions that were placed on their mortgage business as part of a multi-state regulatory action against the nonbank earlier this year.

As it turns out, Illinois and Montana were just the tip of the iceberg.

Ocwen announced Friday morning that it reached consent agreements with a total of 10 states, including Illinois and Montana, to remove each state’s mortgage servicing restrictions. But, as with Illinois and Montana, each state established new rules and regulations that Ocwen must adhere to.

According to a filing with the Securities and Exchange Commission, Ocwen reached consent agreements with the following states: Georgia, Idaho, Illinois, Maine, Michigan, Mississippi, Montana, Rhode Island, South Carolina, and Wisconsin.

Many of the states previously took regulatory actions against Ocwen over alleged escrow issues by restricting Ocwen’s ability to acquire new mortgage servicing rights and originate new loans in each state.

As with the previously announced agreements with Illinois and Montana, each state’s agreement carries stipulations about Ocwen’s business going forward.

In each of the referenced states, Ocwen is prohibited from acquiring any new residential mortgage servicing rights until April 30, 2018.

Additionally, Ocwen agreed to develop a plan to transition to a new servicing system, moving away from its REALServicing platform, its proprietary servicing platform, which is used to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information.

All of the states’ consent agreements restrict Ocwen from boarding new loans to REALServicing. According to Ocwen, this restriction does not apply to loans already serviced on REALServicing (i.e modifications or loans that are converted to an arrangement where Ocwen acts as a subservicer).

Under the terms of the agreements, Ocwen allowed to merge with or acquire an unaffiliated company or its assets to enable the transfer from REALServicing as long as Ocwen gives the state regulators 30 days-notice and the states do not object to the deal.

As part of the agreements, Ocwen also agreed to engage an auditor to perform an escrow review of between 8,000 and 10,000 loans, and agreed to develop corrective actions plans for errors identified in the review and “provide appropriate consumer remediation.”

Ocwen also committed to develop a plan to improve its consumer complaint handling process.

In a separate release, Ocwen notes that it did not admit or deny liability in these settlements, nor do any of the agreements contain any monetary fines or penalties.

In addition to reaching the agreements with the 10 states, Ocwen noted that two states – Nevada and Indiana – allowed their previous cease-and-desist orders against Ocwen to expire and did not take any additional action at this time.

In a statement, Ocwen noted that it is still negotiating with a number of other states in regards to each state’s regulatory actions.

“Ocwen is pleased to have reached mutually-agreeable resolutions with 12 states to resolve regulatory actions brought against the company in April 2017,” Ocwen said in a statement.

“We continue to work cooperatively with the remaining 19 state regulatory agencies and two state attorneys general, and are committed to seeking timely and acceptable resolutions with these states,” Ocwen continued. “We look forward to productive relationships with all regulatory bodies, and to continue our mission of helping homeowners, especially those struggling to remain in their homes.”

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