The New York Department of Financial Services said Wednesday it will require Ocwen Financial to hire a monitor to ensure that the mega-servicer complies with an agreement to reform its mortgage servicing practices.
“The action was taken after an examination by the department found indications of Ocwen violating the agreement,” the agency said. “The monitor will be in place for two years.”
At deadline, a spokesman for Ocwen—which is in the throes of buying a massive servicing portfolio from Residential Capital Corp.—could not be reached for comment.
According to figures compiled by National Mortgage News and the Quarterly Data Report, Ocwen is one of the largest servicers/subservicers in the U.S. with 764,000 loans under contract. In New York State alone it services 40,000 accounts—mortgages that are “largely” distressed, said the agency.
“It is not enough to have banks and mortgage servicers sign agreements promising to reform their businesses,” said New York Bank Superintendent Benjamin Lawsky. “The best unrealized reforms won’t protect homeowners.”
The agency said that after receiving complaints about the servicer, it conducted a targeted exam of Ocwen’s performance and “discovered gaps in the company’s compliance.”
The department said it is requiring the company to hire a monitor so it “can be sure that the reforms are implemented and homeowners have a real chance to avoid foreclosure.”
In September 2011 Ocwen was the first servicer to agree to the department’s new “Mortgage Servicing Practices” document, designed to correct robo-signing and foreclosure abuses.
The state’s examination of Ocwen’s servicing practices found that, in some instances, the company failed to demonstrate that it had sent out required 90-day notices before commencing with a foreclosure.
“The exam also revealed gaps in Ocwen's servicing practices, including indications that in some instances it failed to provide the single point of contact for borrowers, pursued foreclosure against borrowers seeking a loan modification, failed to conduct an independent review of denials of loan modifications, and failed to ensure that borrower and loan information was accurate and up-to-date,” the state said in a press statement.
New York is giving the publicly traded company 20 days to find an independent monitor acceptable to the department. The monitor will review Ocwen’s operations and identify and report on corrective actions within 90 days.