Ocwen Settles with California Regulators for $2.5 Million
Ocwen Financial Corp. named two new members to its board of directors as the nonbank servicer works to repair its image in the eyes of regulators and investors.January 21
Altisource Portfolio Solutions promoted John Vella to the new position of chief revenue officer in a bid to grow beyond its relationship with embattled former parent Ocwen Financial.January 20
The Ocwen spinoff Altisource Portfolio Services delivered notices to more than 800 employees and hundreds of contractors this week as part of the company's scramble to reassure investors.January 16
Facing the prospect of losing its license in California, Ocwen would be wise to settle its probe by state regulators in a timely manner, observers said. If it doesn't, the mortgage servicer could lose significant revenue and might even face a cash crunch.January 15
Embattled mortgage servicer Ocwen Financial has agreed to pay $2.5 million to California regulators for failing to prove its compliance with state mortgage lending laws.
California's Department of Business Oversight said Friday that it will drop its effort to suspend the subsidiary Ocwen Loan Servicing's mortgage license in California. The Atlanta servicer had failed for more than a year to provide its California regulator with requested information.
As part of the settlement, Ocwen has also agreed to pay for an independent, third-party auditor, chosen by the state agency. Ocwen is prohibited from taking on any new California customers until regulators determine that it can respond to information requests in a timely manner.
The California settlement is teeny compared to the $150 million Ocwen agree to pay last month to New York regulators to settle allegations that it backdated thousands of foreclosure letters to homeowners. William Erbey, Ocwen's founder and executive chairman, stepped down after 30 years with the company as part of the New York settlement.
The weeks since have been rough for Ocwen. The dust-up with California regulators had caused its shares to plunge nearly 50% last week on fears that the company could lose its license.
The shares fell another 17% Friday after BlueMountain Capital, a New York hedge fund, said it had notified Deutsche Bank, a bond trustee, that Ocwen was in breach of certain default provisions.
"The department is committed to supporting a fair and secure financial services marketplace for all California consumers," said the agency's Commissioner, Jan Lynn Owen, in a press release announcing the settlement Friday. "This settlement allows us to move forward and ensure that Ocwen is meeting its obligations under the law."
California's formal accusation against Ocwen, which was filed in October, will now be withdrawn. Ocwen's failure to provide documents to regulators grew out of a routine regulatory exam.
"We're pleased this frustrating skirmish over what should have been a routine matter is finally resolved," Tom Dressler, a spokesman for the state agency, said Friday. The settlement will allow California regulators to determine if Ocwen has followed the law, he said.
Ocwen had no comment at press time.
From now on, California said, the third-party auditor will review the loan-file information provided by Ocwen. The auditor will submit a report on its compliance with the California Residential Mortgage Lending Act, the 2012 Homeowner Bill of Rights (a series of state laws designed to protect distressed homeowners and those in foreclosure), and other state and federal laws and regulations.
The auditor will submit a report to the state agency that assesses Ocwen's loan servicing procedures, processes and staffing levels. Ocwen will have to adopt an action plan to correct any deficiencies identified by the auditor.
The state can still pursue an enforcement action against Ocwen if there are any substantive violations of state laws designed to protect consumers.