Ocwen – could servicing cease in MA & MD?
Last month 25 states issued cease and desist orders against Ocwen, with Florida filing a lawsuit against Ocwen in the United States District Court. In general, these orders prevent Ocwen from acquiring new MSRs and acquiring and originating new residential mortgages until Ocwen can provide to state regulators a reconciliation of its escrow accounts and in some cases a financial analysis of Ocwen’s liabilities. Some orders also include monthly and quarterly reporting requirements. In addition,
Massachusetts pulled Ocwen’s license to service loans and ordered them to transfer their entire Massachusetts residential servicing portfolio to one or more servicers approved by the Division of Banking (30 days to pick a new servicer and 120 days after approval of new servicer to effectuate the transfer).
Maryland ordered Ocwen to immediately migrate loans off REALServicing and onto a new system (aka Servicing Transfer), plus provide a monthly tracking report showing planned IT projects and expected costs. Maryland also wants Ocwen to provide a comprehensive wind-down plan should Ocwen fail to be a going concern (required within 15 business days of the order).
Montana and South Dakota ordered Ocwen to cease any and all foreclosure activity.
Ocwen has the right to a hearing to respond to the alleged charges before these orders become permanent and final. The orders can be suspended upon court order. We have provided a link below to all the orders that have been posted. We also attached Ocwen’s Investor Presentation from this morning, which includes an overview of their response to these alleged charges plus independent reviews and counter party support refuting these allegations.
From a Non-Agency RMBS viewpoint, the Massachusetts and Maryland orders are of immediate concern, as those states are ordering a servicing transfer. That is the reason for this commentary, otherwise, this is old news. The cease and desist from any foreclosures in Montana and South Dakota affect very few loans in any deals.
We have no idea whether any of these orders will become permanent. The state’s issues are mainly consumer-related. Ocwen is vigorously defending itself and “has taken appropriate actions to comply with the Cease & Desist orders while awaiting various legal proceedings to conclude (appeals, filings, etc).”
On page 4 of the Commentary, we list the deals with the greatest exposure to Ocwen serviced loans in Maryland and Massachusetts. The full list of deals is included in an attached Excel spreadsheet.
Contact us at 203-276-0672 to become a client and access all reports and attachments.
