Daily Archives: November 13, 2014

Ocwen abandons Wells Fargo mortgage bid

Ocwen Financial is ending its bid to take over Wells Fargo’s mortgage servicing rights, a deal that amounted to roughly $39 billion in home loans, The Post has learned.

The decision to abandon the acquisition comes after the New York Department of Financial Services asked Ocwen to put an indefinite hold on the deal in February this year, according to regulatory filings.

The decision to end the deal was mutual between the two because of the intense regulatory pressure, according to a source directly familiar with the negotiations.
The deal, if it went through, meant that Ocwen would have the right to service 184,000 home loans from the San Francisco-based bank, filings show.

The DFS, lead by Superintendent Benjamin Lawsky, has been probing Ocwen since at least December 2012, and has accused the company of self-dealing, conflicts of interest, and backdating letters.

Read on.

Wells Fargo to Sell $8.5B In Government-Backed Student Loans to Navient

Earlier this year, Wells Fargo announced plans to get out of the payday loan-like business of direct deposit advances. Now it looks like the banking giant is getting ready to shed another aspect of its business: government-guaranteed student loans.

The Wall Street Journal reports that Wells Fargo struck a deal to sell $8.5 billion of loans to the loan management firm Navient, which in part means consumers will have to change the name of the company they send monthly payments to.

Navient, the largest servicer of federal and private student loans, was spun off from Sallie Mae earlier this year.

Wells Fargo, which had previously moved $9.7 billion in government-guaranteed loans to its held-for-sale portfolio in July, did not disclose the cost of the sale.

Separating the loans from the rest of the company’s student loan portfolio appears to be a long time coming. The bank stopped originating federal student loans back in 2010.

Read on.

Wells Fargo to Sell $8.5B In Government-Backed Student Loans to Navient

Wells Fargo to Sell $8.5B In Government-Backed Student Loans to Navient

Wow!

Justice Department Admits to Misleading Court About Gag Orders

SAN FRANICSCO (CN) – The Department of Justice admitted to misleading the 9th Circuit about controversial “National Security Letters” tied to domestic spying, a newly unsealed letter shows.
Telecommunications companies receive such letters when the FBI makes demands upon them for information on their customers. The letters, abbreviated as NSLs, include gag orders that make the companies keep them confidential, at risk of prison time.
Though U.S. District Judge Susan Illston found the letters facially unconstitutional and ordered the government to stop issuing them, she stayed her ruling pending the 9th Circuit appeal.
At a hearing before a three-judge panel of the federal appeals court last month, government lawyers averred that telecommunications companies could disclose and publicly “discuss the quality” of specific NSLs.
Late Wednesday the 9th Circuit unsealed a Nov. 6 letter from Justice Department attorney Jonathan Levy admitting, “That suggestion was mistaken.”
“We regret this inadvertent inaccuracy and apologize for any confusion that may have been caused,” Levy continued.
Lawyers for companies that had received the NSLs brought the erroneous statement to the government’s attention, according to the letter.

Read on.

Ex-Sky Capital Exec Gets 2.5 Years For Aid In $140M Fraud

Law360, New York (November 13, 2014, 1:23 PM ET) — The former chief operating officer of Sky Capital LLC was sentenced in New York federal court on Thursday to 30 months in prison on charges that he aided the brokerage firm’s $140 million investment fraud scheme.

U.S. District Judge Paul Crotty also ordered Stephen Shea, 42, to serve three years of supervised release. Shea pled guilty in February 2011 to conspiracy and fraud charges stemming from Sky Capital’s alleged “boiler room” stock-selling operation on Wall Street.

“I recognize that Mr. Shea is not going to commit…

Source: Law360

CFPB takes action against Franklin Loan over mortgage violations

The Consumer Financial Protection Bureauordered Franklin Loan Corporation to pay $730,000 for giving its employees illegal bonuses for steering consumers into loans with higher interest rates.

From here, the CFPB asked a federal district court to approve a consent order requiring the company to end its illegal compensation system and refund the consumers it harmed.

Between 2011 and 2013, Franklin Loan originated approximately $887 million in loans.

And according to the Bureau, from June 2011 to October 2013, Franklin Loan paid at least $730,000 in quarterly bonuses to 32 loan officers based in part on the interest rates on the loans they provided to borrowers; the higher the interest rate of the loans closed during the quarter, the higher the loan officer’s quarterly bonus.

Read on.