HousingWire just broke the story (here) that the company’s Executive Chairman, William Erbey is resigning and Ocwen Finnaical (OCN) will, once again, pay a huge fine, this time to the New York Department of Financial Services amounting to $150 million to homeowners. According to the HousingWire article:
Ocwen admitted in the agreement with the New York regulatory agency that it didn’t properly deal with distressed homeowners and failed to maintain adequate systems for servicing hundreds of billions of dollars in mortgages.
NYDFS Superintendent Benjamin Lawsky said the action addresses serious conflict of interest issues uncovered during the department’s investigation.
Erbey will also resign as Chairman of the Board of Directors of each of four related companies: Altisource Portfolio Solutions S.A. (ASPS), Altisource Residential Corporation (RESI), Altisource Asset Management Corporation (AAMC), and Home Loan Servicing Solutions, Ltd. (HLSS).
Additionally, Ocwen — the fourth-largest mortgage servicer in the country and largest subprime mortgage servicer in the United States — will undertake significant operational reforms to address serious servicing misconduct and conflict of interest issues at the company; have an NYDFS-selected, independent monitor on site for up to an additional three years; and provide “hard-dollar” assistance to New Yorkers totaling $150 million.
That $150 million in hard-dollar assistance Ocwen will pay includes:
$50 million in direct, hard-dollar restitution payments to former and current Ocwen homeowners in New York. Ocwen homeowners in New York who lost their homes to foreclosure will receive a payment of $10,000 each. After the payments are made to foreclosed homeowners, the balance of the funds will be distributed equally to current and former Ocwen homeowners (up to $1,000 each) who have had foreclosure proceedings initiated against them but have not yet lost their homes to foreclosure, and those current Ocwen homeowners will also have the opportunity to be reviewed for a mortgage modification or other alternative to foreclosure.
$100 million for housing, foreclosure relief, and community redevelopment programs supporting New York’s housing recovery.
The NYDFS said that Ocwen may not use so-called “soft-dollar” mortgage modifications of loans it does not own to satisfy any of this $150 million penalty. As a servicer, Ocwen is already under a legal obligation to make such modifications if they are in the best interest of homeowners and investors. As such, soft-dollar settlements do not represent either a punitive penalty to Ocwen for its misconduct or provide significant additional relief to consumers, the NYDFS said.
Moreover, Ocwen shall not seek or accept, directly or indirectly, reimbursement or indemnification with regard to any or all of the amounts payable under today’s agreement; nor will it claim a U.S. tax deduction or tax credit for those payments.
Under the terms of the agreement, Ocwen will continue to not be permitted to acquire additional mortgage servicing rights.
Idle Thoughts. Rumor has it that Ocwen’s name is really “New Co” (as in “new company” spelled backwards). I hope they didn’t pay any Harvard MBAs for that brilliant selection. Given some of the more sinister names of other financial companies, I am at a loss to understand why Ocwen’s leadership didn’t come up with something more befitting of its business model and reputation.
I submit that if Ocwen called itself what it was, i.e. the Vile, Awful, Malevolent, Pugnacious, Immoral, Revolting, and Evil company it is, perhaps the regulators would go easier on them, since it wasn’t trying to be something it’s not, i.e. good, responsible, and honorable.
Hmmm. That gives me an idea for Ocwen’s suggestion box – a change of name: Vampire Servicing, Co., “Where we suck the last drop of blood from our borrowers.” ~PCQ
 Folks watching the train wreck that was the Great Recession and the foreclosure title wave, may remember the infamous company known as “Lender Processing Services” or “LPS.” Their business model was based on developing forged and faked foreclosure documents for lenders, who were too busy making money to get their hands dirty. For a short explanation of their vertical marketing plan see my blog post here. What better way to shake loose of your ugly past than to take a new name that is more befitting of your soullessness? So LPS became Black Knight, a moniker reminiscent of death. Although not directly involved in the sordid servicing abuses of Ocwen, a capital management and lending company took as it’s moniker, Cerberus, the three-headed dog guarding the gates of hell. Perhaps their name selection was selected to convey a message of what happens to those who default on their loans.Posted in Foreclosure, Miscellany, Q-Rants, Servicers | Tagged Bank Ethics?