Mortgage servicer Ocwen Financial Corp. recently purchased 1,705 delinquent Federal Housing Administration-insured loans with an unpaid principal balance (UPB) of $253.1 million from Ginnie Mae.
Ocwen was already the servicer on the pool of loans – which may explain why the deal wasn't postponed or halted by state and/or federal regulators. In February, the New York Department of Financial Services (NYDFS) halted Ocwen's planned purchase of $39 billion of residential mortgage servicing rights (MSRs) from Wells Fargo over concerns that Ocwen didn't have enough resources in place to properly service the approximately 184,000 loans.
The deal, which had been postponed indefinitely, was recently canceled by mutual agreement between the two companies.
Later that same month, Benjamin Lawsky, superintendent of the NYDFS, said both state and federal regulators should play a more active role in deciding whether non-bank servicers have the capacity to handle such deals.
‘I think it is appropriate for regulators – where warranted – to halt the explosive growth in the non-bank mortgage servicing industry before more homeowners get hurt,’ Lawsky said in prepared remarks for the New York Bankers Association Meeting and Economic Forum.
‘We – both state regulators and the regulated servicers – need to make sure that these MSR transfers do not put homeowners at undue risk,’ Lawsky said. ‘We have a vital responsibility to protect consumers. There are real people at the other ends of these loans, and the ability to work with those homeowners is not something that these non-bank firms can build up overnight.’
Ocwen is one of the largest non-bank servicers in the U.S.
In a separate but related action, Lawsky said in April that he was examining potential conflicts of interest between Ocwen and some of its vendors – specifically, why an auction services company that the firm was working with was charging customers nearly three times as much as it did non-Ocwen customers.
Then, in October, Lawsky said an investigation had revealed that Ocwen had backdated thousands of loan-modification denial notices starting in 2012.
‘The existence and pervasiveness of these issues raise critical questions about Ocwen's ability to perform its core function’ of loan servicing, Lawsky wrote in an October letter.Â
As Ocwen continues to fight those legal battles, as well as to improve its servicing operations, rumors are swirling that Lawsky might soon be stepping down from his position as commissioner of the NYDFS. In a recent Wall Street Journal report, people close to the matter speculate that he could be considering a move into the private sector – however, others speculate he will more likely pursue a political career.
The recent purchase of Ginnie Mae loans was made by the company's mortgage servicing arm, Ocwen Loan Servicing, on Dec. 1. That same day, the loans were sold to an unrelated third party, according to a company press release.
Ocwen will continue to service the loans.
‘We expect to execute more such purchases in the next few months, as long as market conditions are favorable,’ explains John Britti, chief investment officer for Ocwen, in a statement.
Ocwen's Ginnie Mae buyout program began in the first quarter.