Ocwen Enters Into Agreement With NYDFS
Mortgage servicer Ocwen Financial Corp. reports that it has entered into an agreement with the New York State Department of Financial Services (NYDFS) that paves the way for the firm to start buying and trading mortgage servicing rights (MSRs) in New York again.
The agreement also lifts the requirement for an independent monitor to report on Ocwen’s progress in complying with enforcement actions brought by the NYDFS against the servicer starting in 2014.
“Ocwen continues to work cooperatively with the NYDFS and believes that its entry into the 2017 consent order, which provides for the termination of the operations monitorship, is in the best interest of its shareholders, customers, servicing clients, employees and other stakeholders,” the company says in a statement released in late March.
Ocwen says the agreement provides a path toward lifting “the MSR acquisition restrictions following an on-site servicing examination to be conducted by the NYDFS.”
Ocwen’s troubles with the NYDFS date back to February 2014, when its planned acquisition of $39 billion of residential MSRs from Wells Fargo was halted by the NYDFS indefinitely over concerns that Ocwen didn’t have the capacity to properly handle the approximately 184,000 loans included in the deal.
Later that same month, Benjamin Lawsky, superintendent of financial services for New York, said both state and federal regulators should play a more active role in deciding whether non-bank servicers have the capacity to handle such deals.
“I think it is appropriate for regulators – where warranted – to halt the explosive growth in the non-bank mortgage servicing industry before more homeowners get hurt,” Lawsky said in prepared remarks for the New York Bankers Association Meeting and Economic Forum.
Lawsky said in April 2014 that he was examining potential conflicts of interest between Ocwen and some of its vendors, including Altisource Portfolio Solutions. At the time, William C. Erbey served as chairman of the board of Ocwen, Altisource Residential, Altisource Asset Management, Altisource Portfolio Solutions and Home Loan Servicing Solutions, which, according to regulators, may have been a conflict of interest. The subsequent investigation ultimately led to Erbey’s resignation and significant restructuring of company leadership.
In December 2014, the NYDFS fined Ocwen $100 million for violating numerous mortgage servicing rules designed to protect consumers. The $100 million was to be used by the state of New York for housing, foreclosure relief and community redevelopment programs. In addition, Ocwen was ordered to pay another $50 million directly to borrowers who were impacted by the violations, including borrowers who were wrongly foreclosed upon due to the firm’s alleged sloppy handling of their mortgages.
The enforcement action ultimately resulted in the company’s founder, Erbey, to step down as executive chairman as of January 2015.
The alleged violations, which occurred between 2009 and 2014, also included the erroneous backdating of letters informing borrowers that they had been denied loan modifications, thus preventing them from being able to appeal.
As part of its settlement, Ocwen agreed to provide additional borrower assistance, such as providing, upon request by a New York borrower, a complete loan file at no cost.
It also agreed to having the monitor put in place. Originally, the monitor was to be in place for a minimum of two years.
As per the settlement, Ocwen was allowed to trade MSRs in New York, but only as long as the deals were reviewed and approved by the NYDFS.
Last year, the Securities and Exchange Commission fined Ocwen $2 million, alleging that the firm used a “flawed, undisclosed methodology” to value mortgage assets and that its internal controls “failed to prevent conflicts of interest” involving its former chairman.
Altisource reveals in a 10-K filing from February that the Consumer Financial Protection Bureau (CFPB) is currently looking into the relationship between Altisource and Ocwen.
In the filing, the company notes that it received a “Notice and Opportunity to Respond and Advise” (NORA) letter from the CFPB late last year about a “potential enforcement action.”
“We are currently responding to such inquiries from governmental authorities relating to certain aspects of our business,” Altisource says in its filing. “We believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with any of these inquiries.
“In conjunction with one such inquiry, on Nov. 10, 2016, Altisource received a Notice and Opportunity to Respond and Advise letter from the CFPB indicating that the CFPB is considering a potential enforcement action against Altisource relating to an alleged violation of federal law that primarily concerns certain technology services provided to Ocwen,” Altisource’s 10-K states. “We understand that a NORA letter provides the recipient an opportunity to present its position to the CFPB before an enforcement action is recommended or commenced. On Dec. 15, 2016, we provided a written response to the NORA letter setting forth the legal, policy and factual reasons why we believe an enforcement action is not warranted.
“We are committed to resolving any potential concerns of the CFPB,” Altisource’s 10-K states. “If the CFPB were to bring an enforcement action against us, the resolution of such action could have a material adverse impact on our business, reputation, financial condition and results of operations. However, we believe it is premature to predict the potential outcome or to estimate any potential financial impact in connection with any potential CFPB enforcement.”
However, the CFPB is yet to announce any new enforcement action against Altisource or Ocwen.
In a separate 10-K filing, Ocwen also says it is “engaged with the CFPB in efforts to resolve certain concerns the CFPB has expressed relating to our servicing practices and technology.”
These concerns primarily stem from the CFPB examination that began in 2014.
“Our negotiations with the enforcement staff of the CFPB could result in a consent order with the CFPB and could entail payment of monetary amounts by us or injunctive relief, among other consequences,” Ocwen says in its filing. “In accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 450, we have accrued $12.5 million as of Dec. 31, 2016, as a result of our negotiations with the CFPB.
“We have not reached any agreement with the CFPB and cannot predict whether or when we may reach such an agreement,” Ocwen adds. “If we are unable to agree upon a resolution, the CFPB could bring an adversarial enforcement action against us. An adversarial enforcement action could be costly to defend, could adversely affect our reputation, and could adversely impact our relationships with counterparties, including lenders, among other consequences. Accordingly, whether or not we reach an agreement after discussions with the CFPB, it is possible that we could incur losses that materially exceed the amount accrued as of Dec. 31, 2016, and the resolution of the matters raised by the CFPB could have a material adverse impact on our business, reputation, financial condition, liquidity and results of operations.”
The news follows Ocwen’s announcement in February that it had settled allegations brought by the California Department of Business Oversight alleging that Ocwen had failed to turn over documentation showing that it complies with the state’s laws.
As per that settlement, the company agreed to pay a fine of $25 million and to deliver about $198 million in debt forgiveness through loan modifications to California borrowers over a three-year period.
Perhaps more importantly, the settlement lifted restrictions that prevented Ocwen from acquiring MSRs in California.
There were no allegations that the documentation in question was false or misleading – just that it had not been provided. Under an initial settlement related to that same action, Ocwen paid a $2.5 million fine and was required to install an independent monitor at its own expense.
myCUmortgage Launches Its Own Servicing Operation
myCUmortgage, a credit union service organization wholly owned by Wright-Patt Credit Union, has launched a new mortgage servicing operation that focuses not only on relationship building, but also on superior member service, resulting in greater member retention.
Basically, the company is bringing its servicing in-house and then offering to subservice loans for other credit unions.
The new mortgage servicing operation will use a member-centric approach and, thus, will help credit unions cross-sell and up-sell other products and services to their members. It will employ a cooperative pricing model by which servicing costs for all client credit unions are lowered as volume rises, myCUmortgage says in a release.
The firm claims that credit unions making use of this service will have access to “the right combination of servicing expertise and credit union experience.” Helping to facilitate this is a “simplified communication approach that uses everyday language to communicate with members in clear terms rather than the regulatory legalese used by most servicers.”
The new servicing operation will provide self-service tools, “including the ability to accept payments in the branch, regardless of whether the loan is a credit union portfolio or has been sold to an investor.”
It will also deliver reporting and dashboard tools to help credit unions better manage their mortgage programs.
“For years, our clients have asked us when we were going to take the same member-centric approach of our lending operations to the servicing arena,” says Tim Mislansky, president of myCUmortgage, in the release. “They wanted their loans serviced by someone who understood credit unions and their members.
“For nearly two years, we’ve built a team of mortgage servicing professionals and infused them with credit union values,” he adds. “We have selected great technology tools, developed member-friendly processes and procedures, and performed extensive testing.”
Mislansky notes that most credit union members don’t expect their mortgages to be serviced by a third party.
“That’s why we’re launching programs that will allow credit unions to handle more of the member servicing interaction while myCUmortgage handles the heavy lifting in the back office,” he says. “When mortgage servicing is done right, it leads to member retention and the deepening of relationships. That’s what we’ll be doing for credit unions.”
myCUmortgage will convert its existing servicing portfolio, along with nearly 50 balance sheet loans from the current subservicer, in May. After all existing business is converted and members are completely set up on the new platform, myCUmortgage will offer this credit union and member-centric solution to all credit unions.
BB&T Opens New Mortgage Servicing Center In South Carolina
Mortgage lender and servicer BB&T Corp., one of the largest financial services holding companies in the U.S., with $219.3 billion in assets and current market capitalization of about $38.1 billion, in February held groundbreaking ceremonies for its new, 140,000-square-foot mortgage servicing center in Mauldin, S.C.
The new $30 million building will accommodate more than 600 BB&T associates who work primarily in administrative, back office and support functions. BB&T expects to complete construction and move into the facility by the end of the fourth quarter.
“The construction of this new mortgage servicing center is indicative of BB&T’s commitment to South Carolina, Mauldin and the greater Greenville area,” says Tol Broome, president of mortgage lending at the company, in a release. “With this state-of-the-art facility, we will be better equipped to provide our clients with superior service as we help them fulfill the dream of homeownership.”
MountainView Rebrands To MountainView Financial Solutions
MountainView Capital Holdings is now MountainView Financial Solutions.
The company says the name change and rebranding better reflects its diverse offering of professional services.
The rebranding also includes a new logo and a new website at MViewFS.com.
MountainView has previously operated under multiple service names, including MountainView Servicing Group, MountainView Capital Group, MountainView Risk Advisors, MountainView IPS and McGuire Performance Solutions.
As per the firm’s recent announcement, MountainView Financial Solutions specializes in the valuation and pricing of mortgage servicing rights, loans and other hard-to-value financial assets. The company provides independent, accurate, transparent and timely fair value measurements and price verifications, as well as the related risk management metrics, for a variety of assets.
MountainView also offers a comprehensive suite of customizable credit and interest rate risk management solutions. The company assists clients in better understanding and addressing the underlying balance sheet and income statement risks across the entire spectrum of assets and liabilities. MountainView’s services provide clients with the ability to meet their regulatory and profitability goals by bringing greater precision to modeling cashflows, market exposures, prepayment rates and other variables.
MountainView also offers model risk management via a team that understands the substantial challenges and risks that financial models can present and the related potential for lost opportunities and unforeseen exposures. The company offers its clients extensive guidance on model use, governance and assumptions. MountainView also validates ALM models, capital stress test models, mortgage servicing rights models and other financial models used by all sizes and types of financial institutions.
Meanwhile, MountainView’s transaction advisory group focuses on supporting the needs of the firm’s clients in whole loan and mortgage servicing right purchase and sale transactions. The company’s extensive network of clients ensures that it can assist its clients in obtaining the best execution possible, whether they are buying or selling mortgage-related assets.
For whole loan buyers in need of more extensive support, MountainView offers sourcing, pricing and bidding, due diligence, transaction management, credit oversight, and asset management services.
Specialized Loan Servicing Now Offers Subservicing For Prime Loans
Mortgage servicer Specialized Loan Servicing (SLS) announced in March that it is now offering subservicing for both prime and nonperforming loans.
The firm’s new prime servicing offering for mortgage lenders includes a private-label option, direct call transfers for refinance opportunities, friendly customer service and detailed investor reporting. It also includes the SLS InvestorWeb online portal, which allows investors to directly manage prime asset portfolios. Loan customers can also use BorrowerWeb to conveniently manage all of their home loan account details online.
“We put the customer at the heart of everything we do,” says Toby Wells, CEO of SLS, in a release. “We have created educational tools and resources to help our clients’ customers proactively manage their home loans. Building on our 10-year track record of specialty servicing, we’ve expanded our team, processes and technology capabilities to address the prime servicing needs of mortgage lenders and investors.”
“SLS has built a great platform for prime loans, and we are excited to leverage their private-label capabilities,” adds Tom Millon, CEO of CMC Funding. “We have successfully transferred more than 20,000 prime borrowers to SLS, and we are delighted by their quality customer service and attention to borrowers’ needs.”
SLS and CMC are part of Computershare’s Loan Services division, which manages a portfolio of more than $55 billion in unpaid balance.