Ocwen – Uh Oh – Liquidation Proceeds not remitted to the Trust?
Typical Language in a Pooling & Servicing Agreement
“The Servicer shall withdraw or shall cause to be withdrawn from the related Servicing Account and shall immediately remit or cause to be remitted to the Trustee for deposit into the Distribution Account, amounts representing the following collections and payments …
(ii) Principal Prepayments in full and any Liquidation Proceeds received by the Servicer with respect to such Mortgage Loans in the related Prepayment."
Some observations:
1. Although we can never be 100% certain, the evidence we discovered using data from Ocwen, CoreLogic, Public Records and Remittance Reports suggest that there are loans that Ocwen had liquidated, yet had failed to pass the proceeds through to the trust. These loans still appear in the trust with a positive balance, although the properties had long been sold. Based on our limited investigation, we estimate approximately 253 loans for $70,425,708 (see examples pages 2-8).
2. We discovered loans that Ocwen boarded from Homeward with a $0.01 balance but the trust is still reporting with positive balance. We were able to identify properties behind a $9 million loan and a $1.8 million loan, and our investigation revealed that the Trustee had sold these properties months prior to the transfer. Although the previous servicer failed to pass the proceeds through to the trust, it appears that Ocwen did not correct the issue upon transfer. Instead, Ocwen Investor Reporting shows these as 90+ day delinquent loans while internally Ocwen shows these as paid off. Based on our limited investigation, we estimate approximately 32 loans for $17,809,724 (see examples pages 9-12).
3. We discovered other foreclosure sales, short sales, etc, occurring over 6 months ago, yet the loans are still showing up in the trust as active. Again, we can never be 100% certain, but that is what the data reveals. Based on our limited investigation, we estimate approximately 73 loans for $23,786,414 (see examples pages 13-14).
We based our observations only by studying loan level data. We investigated seven loans in detail that confirmed our observations. We cannot accurately predict whether our observations hold true on every loan listed, but we believe our data sources are reliable (see our disclaimer).
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