Regulators prepare to crack down on servicers

by Ryan Smith13 Nov 2014
Regulators are preparing to crack down on some of the largest nonbank mortgage servicers after doubts about liquidity and homeowner complaints about unauthorized fees and improper foreclosures.

State and federal regulators are shortening the leash on the three largest nonbank servicers, including the embattled Ocwen Financial Corp., according to a Bloomberg report. State authorities plan to recommend standards on liquidity, capital and corporate governance next month, while the Federal Housing Finance Agency says it will set new risk management guidelines by Dec. 1.

Ocwen, Nationstar Mortgage Holdings and other nonbank servicers handle payments for about 15% of home loans across the country, according to Bloomberg. But a study by the FHFA’s inspector general said many servicers showed “warning signs” of financial weakness, and regulators worry that some companies may not have the liquidity to withstand financial setbacks.

Meanwhile, the New York Department of Financial Services is investigating Ocwen and Nationstar for allegations that they’ve mishandled loan modifications. Ocwen, accused of backdating letters to thousands of struggling homeowners, is preparing to settle claims against it for as much as $100 million.

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