The bad news keeps coming for Ocwen Financial

by 24 Oct 2014
When it rains, it pours, and Ocwen Financial Corp. is in the biggest storm of its life. The largest U.S. nonbank servicer, which is being accused of backdating thousands of letters to struggling borrowers, may have also violated a consent order.
 
Revelations that Ocwen denied struggling borrowers the chance to fix loan problems and avoid foreclosures may violate a settlement it struck in December 2013 with the Consumer Financial Protection Bureau (CFPB) and 49 state attorneys general.
 
That CFPB agreement was aimed at resolving mortgage-servicing issues with homeowners at Atlanta-based Ocwen and the companies it acquired over the years. Ocwen agreed to the $2.1 billion consent order last year to settle allegations by regulators of abusive practices that included imposing unauthorized fees on homeowners for default-related services and denying modifications to people who should have qualified, according to Bloomberg.
 
The mounting regulatory issues may also affect Ocwen Financial’s pending deal to purchase $39 billion in mortgage-servicing rights from Wells Fargo. The transaction has been in jeopardy since February when Benjamin Lawsky, superintendent of New York's Department of Financial Services, put an “indefinite hold” on it.
 
Since the recent announcement of Ocwen’s alleged abuses, the company’s shares have fallen dramatically. Its stocks fell more than 11% to $19.04 per share on Wednesday, the lowest since Aug. 1, 2012. The value of the company has also plummeted nearly 66% this year amid heightened scrutiny from several agencies.
 
Yesterday, Barclays issued warnings to its investors about the uncertainty of Ocwen’s future. “The best case for RMBS investors would be that this issue is fairly contained, it leads to only a small fine on Ocwen, and the practices are resolved fairly quickly,” Barclays said.

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