Ocwen fires back against poor mortgage-servicing accusations

by MPA23 Mar 2015
Ocwen Financial Corp. has denied accusations of poor mortgage-servicing practices and said on Monday that it had sent a letter to trustees of 119 mortgage pools, arguing that it should not be removed as a servicer. 

In the letter, Ocwen rejected efforts investors are making to remove the firm as the servicer of billions of dollars of mortgage pools. “Ocwen has explored and identified untenable legal arguments and factual misapprehensions underlying” the investor claims, Ocwen’s general counsel wrote to trustees who will examine both sides’ arguments.

Ocwen also added that some investors were forcing changes to servicing practices to benefit their specific holdings through increased foreclosures, at the expense of long-term gains to the trusts as a whole through loan modifications, according to The Wall Street Journal, which was the first to report the story.

In January, an investor group, which included BlackRock, MetLife and Pimco, sent a formal notice of non-performance to Ocwen and trustees alleging improper loan modification practices, wrongfully recouped advances and a failure to account for cash flows.

The notice also stated Ocwen steered work to affiliates such as Altisource Portfolio Solutions and Home Loan Servicing Solutions for allegedly unnecessary, or overpriced, mortgage servicing to the detriment of the trusts, investors and borrowers.

"Your letter obscures the ultimate objective of your investor clients: to stop servicers from modifying loans and force them to foreclose on, and evict, as many struggling homeowners as quickly as possible,” Ocwen said at the time of the letter. “While knee-jerk foreclosures may redound to the special economic interests of your clients, they are not in the best interests of the trusts as a whole, not consistent with industry practice and therefore prohibited under the servicing agreements.”

Ocwen added that the letter sent by the investors “was drafted in an inflammatory tone, with misleading content, and coordinated with media release so as to create wildly false impressions.”
 

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