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Ocwen Gets REO Deal

The Department of Veterans Affairs is preparing to turn over its foreclosed properties to Ocwen Federal Savings Bank in mid-August.

Ocwen, based in West Palm Beach, Fla., won the bidding to manage and sell VA's real estate-owned inventory, which currently includes 12,000 foreclosed properties. But VA attorneys are still reviewing the contract before it can be finalized.

The director of the VA loan guaranty program, Keith Pedigo, said the contract review is procedural, but it will probably take until Aug. 15.

After that, VA will begin transferring blocks of properties to Ocwen over a 150-day transition period, Mr. Pedigo said.

When VA first solicited bids to privatize its REO operation over two years ago, the agency was able to finance REO sales with VA-guaranteed loans, known as vendee loans, to non-veteran buyers.

The Bush administration succeeded in killing the vendee loan program at the start of 2003.

However, legislation is moving through Congress that might revive it.

The House has passed a bill (H.R. 1460) by a vote of 421-0 that would provide disabled veterans with special housing and business education benefits. The bill, sponsored by Rep. Rick Renzi, R-Ariz., also reinstates the vendee loan program.

"This bill will help make entrepreneurship a more integral part of rehabilitation for disabled veterans and bolster the opportunity for disabled veterans to foster home-based businesses," Rep. Renzi said.

The Renzi bill has been referred to the Senate Veterans Affairs Committee.

In other developments, VA has drafted a proposed rule that revamps its loan administration procedures and assigns more loss mitigation responsibilities to servicers.

The proposal is currently going through internal clearance. The VA loan guaranty director expects it will take at least another two months before the servicing proposal is published for public comment.

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