New York banking regulator Benjamin Lawsky said Wednesday his office will investigate claims that Ocwen Financial Corp. (OCN) and other servicers require distressed borrowers to sign nondisclosure agreements in order to receive mortgage modifications.
"Reports that Ocwen is imposing a gag rule for certain struggling homeowners preventing them from criticizing the company are troubling and deeply offensive," the supervisor of the state Department of Financial Services said in an emailed statement. "We will investigate this issue immediately."
The proposed investigation was first reported on Wednesday by
The majority of Ocwen's loan modifications are completed without a borrower filing a legal claim, and in those cases, the servicer does not require borrowers to agree to nondisparagement clauses, a spokesperson says in a written statement to American Banker.
Loans where a workout includes litigation "represent only a fraction of one percent of the loans in our portfolio," many of which are resolved amicably, the spokesperson adds.
"In those cases, we generally request the settling party to agree to refrain from publicly disparaging the company in the future. We find this is useful for both sides to achieve finality of the dispute and believe it is reasonable and consistent with industry practice."
Lawsky's response to the report follows months of scrutiny by the bank regulator over Ocwen's dealings with homeowners. In a speech Tuesday to the Mortgage Bankers Association, Lawsky said the New York State Department of Financial Services intends to
Earlier this year, the bank regulator
Ocwen is based in Atlanta and has a New York mortgage banking charter.