Daily Archives: October 22, 2014

Ocwen’s Backdated Letters May Violate Consent Order By CFPB and 49 state AGs

Revelations that Ocwen Financial Corp. (OCN), the largest U.S. nonbank servicer, backdated thousands of letters tostruggling borrowers may violate the settlement it struck in December with the Consumer Financial Protection Bureau and 49 state attorneys general.

That agreement, reached in December 2013, was intended to resolve mortgage-servicing issues with homeowners at Atlanta-based Ocwen and companies it acquired over the years. Benjamin Lawsky, head of New York’s Department of Financial Services, said in a letter yesterday that Ocwen backdated thousands of loan modification denial notices to borrowers in 2012 and continuing into 2014. The backdating left some borrowers with insufficient time to appeal the denials, according to the letter, “likely causing them significant harm.”

“The existence and pervasiveness of these issues raise critical questions about Ocwen’s ability to perform its core function of servicing loans,” Lawsky wrote.

Read on.

J.P. Morgan was aware of overseas hiring concerns before U.S. probe

Ah, another day, another crime…

Several executives at J.P. Morgan Chase & Co. in New York were warned of potential problems related to the bank’s hiring practices in China more than a year before the program came under scrutiny by the U.S. government, according to people familiar with the matter and documents reviewed by The Wall Street Journal.

A bank official in Asia alerted legal and compliance executives in New York in 2011 of anonymous accusations that the bank’s recruitment of a prominent son or daughter of a senior Chinese official helped it win an investment-banking assignment, according to company emails reviewed by the Journal. J.P. MorganJPM, -0.48%  officials later discussed those accusations, and changes were proposed to the region’s hiring practices, according to the emails.

Read on.

Tennessee Woman sentenced to jail for not mowing her lawn

And how many bankers were sent to jail?? Never mind…

From Yahoo News:

 If you are a resident of Lenoir City, Tennessee, you might want to remember to mow your lawn — otherwise, you will be spending the night in jail.

Karen Holloway just spent six hours in a jail cell for failing to maintain her yard in accordance with the standards set by the city.

The saga began last summer, when Holloway was sent a citation for her overgrown grass and shrubbery. Holloway, who works a full-time job and has two children living at home, a husband in school, and one family vehicle, admits the yard needed some attention but that it just wasn’t feasible to do the work.

“The bushes and trees were overgrown. But that’s certainly not a criminal offense,” she says.

Last week, Judge Terry Vann handed down a five-day jail sentence to Holloway for refusing to comply with the city ordinances regarding yard maintenance, specifically the lack thereof. Holloway feels this was all just too much, saying, “It’s not right. Why would you put me in jail with child molesters and people who’ve done real crimes, because I haven’t maintained my yard.”

In addition to the severity of the sentencing, Holloway say she also feels that she was bullied during the process because she was never read her rights or told that she could have a lawyer present.

Oops! Ocwen admits to faulty letters to borrowers

Having we heard this story before???

October 21, 2014

Ocwen Corrects Earlier Statement in Response to Letter From New York Department of Financial Services

ATLANTA, Oct. 21, 2014 (GLOBE NEWSWIRE) — Ocwen Financial Corporation (NYSE:OCN), the nation’s largest independent mortgage servicer, today issued the following update to its earlier statement addressing a letter it received from the New York Department of Financial Services (“DFS”) related to erroneously dated borrower correspondence:

“Ocwen wishes to correct its statement in a press release earlier today that 283 borrowers in New York received letters with incorrect dates. Ocwen is aware of additional borrowers in New York who received letters with incorrect dates but does not yet know how many such letters there were. Ocwen is continuing its investigation into these matters. We are working with and fully cooperating with DFS and the Monitor to address their concerns.”

Source: Ocwen website

Sen. Warren calls for GAO investigation of nonbank servicers

After running afoul of the New York Department of Financial Services, the Securities and Exchange Commission, the monitor of the National Mortgage Settlement, the Federal Housing Finance Agency Office of the Inspector General, and the Consumer Financial Protection Bureau in the past few months, nonbank mortgage servicers may have a new nemesis on their hands, Elizabeth Warren.

Warren, the Democratic Senator from Massachusetts, has long been at the forefront of Washington’s fight for financial reform. She was instrumental in the formation of the CFPB and now she has her sights set on nonbank mortgage servicers.

Warren, along with Congressman Elijah Cummings, D-Md., sent a letter this week to the U.S. Government Accountability Office, requesting a study of the risks posed to consumers by the “unprecedented” growth in nonbank mortgage servicing.

Read on.

Told ya so!: Regulatory ignorance of JP Morgan London Whale risks

And as a reminder again: Jamie Dimon served on the NY Fed board while he was still CEO and Chairman of JP Morgan Chase. He resigned from the  NY Fed board in 2013. 

Zerohedge:

Bear in mind, as @ctorresreporter notes, the Fed’s OIG report is a 4-page summary and The Senate released a 300-page report last year… Choose Your Watchdog!!

The Board Should Enhance Its Supervisory Processes as a Result of Lessons Learned From the Federal Reserve’s Supervision of JPMorgan Chase & Company’s Chief Investment Office

In May 2012, media outlets reported that JPMorgan Chase & Company’s (JPMC) Chief Investment Office (CIO) incurred approximately $2 billion in losses due to a complex trading strategy involving credit derivatives. Losses continued over the following months and surpassed $6 billion by the end of 2012. This matter highlighted corporate governance, risk management, and internal control weaknesses at JPMC, which resulted in reputational damage to the institution and considerable congressional, regulatory, and public scrutiny.

In July 2012, we initiated this evaluation (1) to assess the effectiveness of the Board of Governors of the Federal Reserve System’s (Board) and the Federal Reserve Bank of New York’s (FRB New York) consolidated and other supervisory activities regarding JPMC’s CIO and (2) to identify lessons learned for enhancing future supervisory activities.

Findings…

Our report contains four findings.

First, as part of its continuous monitoring activities at JPMC, FRB New York effectively identified risks related to the CIO’s trading activities and planned two examinations of the CIO, including (1) a discovery review of the CIO’s proprietary trading activities in 2008 and (2) a target examination of the CIO’s governance framework, risk appetite, and risk management practices in 2010. Additionally, a Federal Reserve System team conducting a horizontal examination at JPMC recommended a full-scope examination of the CIO in 2009. However, FRB New York did not discuss the risks that resulted in the planned or recommended activities with the OCC in accordance with the expectations outlined in SR Letter 08-9. As a result, there was a missed opportunity for the consolidated supervisor and the primary supervisor to discuss risks related to the CIO and to consider how to deploy the agencies’ collective resources most effectively.

FRB New York did not conduct the planned or recommended examinations because (1) the Reserve Bank reassessed the prioritization of the initially planned activities related to the CIO due to many supervisory demands and a lack of supervisory resources, (2) weaknesses existed in controls surrounding the supervisory planning process, and (3) the 2011 reorganization of the supervisory team at JPMC resulted in a significant loss of institutional knowledge regarding the CIO. We acknowledge that FRB New York’s competing supervisory priorities and limited resources contributed to the Reserve Bank not conducting these examinations. We believe that these practical limitations should have increased FRB New York’s urgency to initiate conversations with the OCC concerning the purpose and rationale for the planned or recommended examinations related to the CIO. Even if FRB New York had either initiated conversations with the OCC to discuss the planned or recommended examinations in accordance with SR Letter 08-9 or conducted the planned or recommended activities, we cannot predict whether completing any of those examinations would have resulted in an examination team detecting the specific control weaknesses that contributed to the CIO losses.

Second, we found that Federal Reserve and OCC staff lacked a common understanding of the Federal Reserve’s approach for examining Edge Act corporations. In our opinion, this disconnect could result in gaps in supervisory coverage or duplication of efforts.

Third, we found that FRB New York staff were not clear about the expected deliverables resulting from continuous monitoring activities. Enhanced clarity concerning the expected deliverables could improve the effectiveness of this supervisory activity.

Finally, we found that FRB New York’s JPMC supervisory teams appeared to exhibit key-person dependencies. In our opinion, these dependencies heightened FRB New York’s vulnerability to the loss of institutional knowledge.

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Surprise – they knew 2 years before it exploded… did nothing… because (among other reasons) individuals and key-people appeared unwilling to pull the trigger.. and then – even if they had discussed the ‘risks’, the Fed IG says it is unclear whether it would have led to less risk-taking!!?

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So you feel safer now?

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Ironically, just yesterday, two Fed members told banks to fix it… (as WSJ reports)

Federal Reserve officials sent a warning shot across Wall Street on Monday, telling bank executives they must do more to curb excessive risk-taking and improve employee behavior at their firms or face stiff repercussions, including being broken into smaller pieces.

Federal Reserve Gov. Daniel Tarullo and Federal Reserve Bank of New York President William Dudley , in closed-door speeches Monday to bank executives gathered at the New York Fed, said Wall Street must clean up its behavior and image.

Mr. Dudley raised the specter of breaking up big banks, saying if firms don’t prove they can comply with the law, “the inevitable conclusion will be reached that your firms are too big and complex to manage effectively. In that case, financial-stability concerns would dictate that your firms need to be dramatically downsized and simplified so they can be managed effectively.”

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So – in conclusion – The Fed admits it knew about the risks of JPMorgan’s London Whale in 2010 (2 years before the blow-up) and did nothing about it, and now, two years later, The Fed tells banks it will get serious…