REO Liquidations still sitting in your Deals

Back in March we discovered 253 Ocwen serviced loans for $70MM UPB that had been liquidated (REO sold), but the trust still showed them as a REO and the losses were not passed through. Today, we still have 121 loans for $33MM UPB, with some new loans added. (Spreadsheet attached with loan level details)

This issue is not limited just to Ocwen. Oddly, Ocwen makes it easy by providing an internal and external status field that we can compare. We have found loans with this same problem at other servicers, but unfortunately, we cannot quantify this problem. The good news is that servicers generally remit liquidation proceeds in a timely manner. However, as deals do factor down, these unremitted liquidation proceeds and losses can cause unexpected disturbances for individual bonds. All the stories today are worth reading, however, the Montana loan on page 9 is a scary example of a landmine waiting to blow for investors in TMST 2006-6.

Sifting through these loans, we came across more examples of one of our pet peeves: unprosecuted borrower fraud. We did not have to look hard to find the three cases described in today’s commentary. Before we start, we list 13 deals that were called this month.

Called Deals – November 2015 Remittance