Ocwen Wins VA Contract
Ocwen Federal Savings Bank has tentatively won the bidding for a Department of Veterans Affairs' contract to take over the management and sale of VA-foreclosed houses.
However, the award of the contract is being challenged by a union representing VA employees who stand to lose their jobs if a private firm takes over the agency's REO operation. (REO stands for real estate-owned.)
Ocwen is based in West Palm Beach, Fla., and it specializes in servicing nonperforming loans and managing REO. The company could not be reached for comment.
The appeals process should be completed in a few weeks, according to Keith Pedigo, the director of VA's loan guaranty program.
"So probably around the last part of April we may know with certainty whether that (REO) function gets contracted out or stays in-house," he said.
The VA home loan program has a full-service operation for dealing with over 20,000 foreclosures a year.
This REO operation had 276 employees in 1999 when the Office of Management and Budget directed VA to study whether privatization of its REO operation would be more cost-effective.
But over the past three years, staffing at VA's REO unit had fallen to 125 employees due to normal attrition and fears that they might lose their jobs if a private sector firm won the bidding.
In other news, VA is working on a proposed regulation that could bring "sweeping changes" to the way VA loans are serviced, the VA loan guaranty director said.
The major emphasis of the proposal is to prevent foreclosures and to encourage servicers to use loss mitigation techniques. Mr. Pedigo indicated that it would be at least two months before the proposed rule will be ready to issue for public comment.
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