Date: May 7, 2015Author: admin
Recently, the trend is shifting and the new report that Ocwen has failed a compliance test regarding loan modification and loss medication processes is troubling. It is evident that Ocwen’s approach of cost cutting is preventing it from improving compliance and maintaining its stature as a leader of creative problem solving in the servicing industry.
According to Bloomberg Business, Ocwen maintains 70% of its employees in India. One can only imagine this has exacerbated the companies communication and compliance problems. Ocwen CEO Ronald Faris stated that Ocwen will be looking to contract its operations in an effort to improve compliance. This is an acknowledgment that the company grew too big, too fast which has resulted in preventable injuries to many borrowers.”
Ocwen reported preliminary first-quarter earnings last week in which it said it does not expect to face any fines or actions from regulators that would have a material impact on its results.
In December, Smith launched an investigation of Ocwen saying he could not rely on the Atlanta servicer’s internal review process.
The retesting of metrics began last year after a whistleblower contacted Smith claiming that Ocwen was selecting its own samples of loan files instead of taking a statistical sample. Smith then created a hotline to allow any concerned employees to contact him.
The results of the current review by the independent accounting firm McGladrey show that Ocwen failed just one metric, on loan mod documentation, that it had previously claimed to have passed. The company passed eight other tests including one that its internal review group claimed to have failed on terminating force placed insurance agreements.
To put Ocwen’s results in perspective, last year, Green Tree Servicing failed eight tests during one testing period, prompting further scrutiny of nonbank servicers’ processes.
Ocwen has replaced an unnamed executive who had previously led the internal review group that was created to comply with terms of the 2012 national mortgage settlement, Smith said. The company also has reorganized its employees, adopted corporate governance principles and enhanced the monitor’s access to information, Smith said.
The settlement allows banks and servicers to correct all violations, and it only subjects them to financial penalties if their mistakes reach a specific “error threshold” after corrective actions have been taken. No bank or servicer has yet paid financial penalties for failing any of the 33 metrics being tested by independent reviewers working for Smith.
Ocwen said it is committed to being fully compliant with all the rules and regulations related to its business.
“We are pleased with the progress we have made so far working with the monitor, and we will continue to make every effort to improve all aspects of our compliance procedures and processes,” the company said in an emailed statement.
The 2012 national mortgage settlement with federal regulators and 49 state attorneys general resulted from servicers’ “robo-signing” foreclosure documents and other lapses. Ocwen became a party to the settlement after purchasing mortgage servicing rights from Residential Capital, the former lending arm of General Motors that later belonged to Ally Financial.
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