Monitor: Ocwen Failed Numerous Metrics Last Year, But Is Making Progress

Posted by Patrick Barnard on October 28, 2015 No Comments
Categories : Mortgage Servicing

Mortgage servicer Ocwen failed numerous metrics in the second half of 2014, Joseph A. Smith, monitor for the national mortgage settlement, says in his most recent update on Ocwen's progress.

In addition to failing numerous metrics related to its letter-dating problems last year, Ocwen failed to comply with servicing standards regarding the propriety of default-related fees (e.g., property preservation fees, valuation fees and attorneys' fees) collected from borrowers. It also failed with regard to the requirement that it notify borrowers of any missing documents within 30 days of a request for a short sale.

The national servicer also failed to include certain information in some of its notifications to borrowers when they applied for a mortgage modification, such as the reason for the denial, the factual information considered by the servicer in making its decision and a time frame by which the borrower can provide evidence that an eligibility determination was made in error.

Smith notes that in the fourth quarter, Ocwen did, however, make good on a corrective action plan (CAP) to resolve a ‘potential violation detailed in a prior report.’ As such, the potential violation has been ‘cured.’

Smith's most recent report is the first to address Ocwen's compliance on its entire portfolio, which includes the portfolio it acquired from ResCap.

The report mentions that Ocwen failed on several metrics with regard to timeline requirements on notifications to borrowers who had been denied modifications – however, Smith had indicated in his last report that these issues had already been resolved. The monitoring of Ocwen's performance in this area continues.

‘Ocwen is addressing the metrics related to letter-dating issues through a global CAP that I have approved and the monitoring committee has reviewed,’ Smith says in his report.

In a statement, Ocwen officials say that Smith's most recent report ‘confirms continued confidence by the Office of Mortgage Settlement Oversight (OMSO) in the changes we have made to our [internal review group (IRG)] function, the qualifications and process around our metrics testing, and discusses our state of compliance with the national mortgage settlement.’

Ocwen officials emphasize that the specific metrics mentioned in the report ‘are from the third and fourth quarters of 2014 and not a reflection of our current operations.’

‘They have all been addressed with CAPs approved by OMSO and implemented by Ocwen in 2015,’ company officials say in the statement. ‘We also note that the monitor's report specifically discusses that Ocwen has cured its potential violation regarding termination of lender-placed insurance and passed that metric during the cure period in the fourth quarter of 2014.

‘Ocwen is committed to being fully compliant with all rules and regulations related to our business, and we continue to invest in our risk and compliance management systems,’ officials add. ‘We will continue to work closely with the monitor and look forward to the next report.’

In August, Smith announced that the problems he had previously uncovered with Ocwen's IRG had largely been resolved.

These stemmed from May 2014, when an Ocwen employee reported issues that called into question the independence of the IRG. The employee, according to an earlier report from Smith, ‘contacted a member of the monitoring committee and alleged serious deficiencies in [Ocwen's IRG] process, which called into question the IRG's independence and the integrity of the IRG's operations.’

A subsequent investigation revealed that the internal IRG – which was to select loan files for review, independent of management – may have been unduly influenced as to which loan files to submit for review.

Smith launched an investigation into these claims and determined that he could not rely on a portion of Ocwen's work for the first quarter of 2014. He then directed independent auditing firm McGladrey to retest Ocwen's performance on certain at-risk metrics. That audit revealed that Ocwen's GAC plan to address its letter-dating issues was effective.

‘After a review of the issues I found with Ocwen's [IRG] integrity and subsequent review of its work to address these problems, I have reported to the court that I now have a measure of assurance that the issues with Ocwen's IRG's independence, competency and capacity have been sufficiently addressed,’ Smith wrote in his August report.

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