Daily Archives: August 29, 2016

Layoffs at PHH: HSBC doesn’t plan to continue using PHH as subservicer

Housingwire:

Late last week, PHH announced that it recently received notice from HSBC Bank that it plans to sell the mortgage servicing rights on approximately 139,000 mortgage loans currently subserviced by PHH to an unknown buyer.

And worse for PHH, HSBC informed the company that the purchaser of the mortgage servicing rights does not plan to continue using PHH as a subservicer.

According to a report from Buffalo Business First, HSBC’s decision will lead to PHH laying off a number of employees from its Amherst location.

Buffalo Business First reported that the number of job cuts is currently unknown, but stated that the company has 300 employees currently at its Amherst location.

Judge tosses Ocwen, Altisource kickback lawsuit

Housingwire:

Just this past week, Ocwen agreed to pay $900,000 to the state of Washington after an investigation conducted by the state found that Ocwen used unlicensed companies in India and the Philippines to service mortgage loans.

And more good/bad news came out for Ocwen last week, when a federal judge dismissed a racketeering lawsuit against the nonbank.

According to Reuters and Westlaw News, Ocwen stood accused of “overcharging thousands of homeowners for property inspections as well as taking kickbacks” from a scheme that allegedly involved Ocwen and Altisource Portfolio Solutions, a company that is closely affiliated with Ocwen.

The Reuters report provides scant details, but a review of the court filing shows that a pair of homeowners sought class action status and sued Ocwen and Altisource for allegedly overcharging for property inspection and broker price opinions, with Altisource allegedly providing “kickbacks” to Ocwen in exchange for using its services and passing those increased costs onto the borrowers.

The plaintiffs in the case claimed that Ocwen, Erbey and Altisource engaged in an “abusive, predatory and illegal home mortgage loan servicing business,” and in some cases, performed multiple property inspections and BPOs to “run up unnecessary fees.”

The good news for Ocwen is that the lawsuit was dismissed, as in the eyes of the judge, the plaintiffs’ claims didn’t hold water. Specifically, the judge said the plaintiffs’ case “failed to allege facts that are sufficient to make out a viable claim for relief.”

But Ocwen didn’t get off scot-free. In fact, the judge called the charges levied against Ocwen and Altisource “extremely troubling,” as the plaintiffs allegations are “bolstered” by other consent orders and settlements Ocwen has previously entered into, like in New York, for example.

Bank of America Pulls Out Of Money Market With New SEC Regulations

As the second largest bank in the United States, Bank of America plans to simplify their investment options as increased regulation looms on the horizon–– and other investment groups seem to be planning on doing the same. After the financial hardships of 2008, The Security Exchange Commission (SEC) passed new regulations aimed at reducing risks for money market funds. These new regulations are set to go into action in October of this year, and will dramatically change investing practices.

Why is this happening?

In many cases, money market accounts can be extremely volatile. During the financial crisis of 2008, failed money market funds left shareholders in treacherous waters, which led to the subsequent invocation of increased regulation from the government.

In a notable case, one fund in particular had share value drop below one dollar. The Reserve Fund had to liquidate all assets after a run on the fundfrom worried shareholders. The fund held $64.8 billion in assets, and of those assets, $785 million were allocated to short-term loans issued by Lehman Brothers.

These “commercial paper” loans became worthless when Lehman Brothers filed bankruptcy.

Although the commercial paper made up only 1.5 percent of the total money market fund, fear among shareholders grew as the news broke about the Lehman Brothers collapse. Within 24 hours, two-thirds of investors pulled their money out of the Reserve Fund. As tumult struck, the net asset value (NAV) fell below $1 per share to 97 cents—marking one of the first times in history the NAV of any money market fund fell that low.

Read on.