New York Regulator Poses Formidable Threat To Mortgage Servicers

Benjamin Lawsky, a relatively unknown New York State regulator, has put the fast-growing non-bank mortgage servicing industry’s business model in jeopardy. Look no further than Ocwen Financial for proof of a servicing segment that remains marred in uncertainty.

Ocwen is reeling following a dispute with Lawsky that killed a promising a $39 billion acquisition of Wells Fargo’s servicing rights. News of the cancelled deal in mid-November sent the company’s shares down as much as 67 percent from their 52-week high. The stock has recovered slightly, but is still off more than 50 percent from a December 2013 high of $58.07.

Now, investors are left wondering whether the servicer – likened to a shark – will be allowed to continue feeding on new mortgages.

Read on.

Wilbur Ross Steps Down From Ocwen’s Board, other public companies

SEC.gov:

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 20, 2014, Wilbur L. Ross, Jr. notified the Board of Directors (the “Board”) of Ocwen Financial Corporation (the “Company”) of his decision to resign as a director on the Board effective immediately as a result of his election as Vice Chairman of Bank of Cyprus and the requirements of certain European regulations which limit directorships of bank officers. Mr. Ross is simultaneously resigning from the board of directors of several other public companies. Mr. Ross’ decision to resign as a director was not due to any disagreements with the Company on any matter relating to the Company’s operations, policies or practices.

Massive foreclosure profits led Ocwen to ignore own mistakes, suit alleges

A federal lawsuit filed in the Southern District of Florida against Ocwen Financial Corp. claims huge profits from the firm’s foreclosure machine led it to act “indifferently” toward cases in which its own mistakes or overcharges exacerbated a defaulted loan.

The suit, which seeks class-action status, was filed on behalf of Illinois homeowners Chad Hopkins and Phyllis Nugent, who went into foreclosure after their loan was transferred to a company taken over by Ocwen, which failed to set up an escrow account to collect for taxes.

The couple was not notified of amounts due to cover items they had previously escrowed until years later when Ocwen rejected a monthly mortgage payment and demanded $7,305 be paid within 45 days.

The suit also claims that Ocwen charged for unnecessary property-inspection and other default-related fees in order to profit by passing them through to homeowners’ accounts.

Read on.

Family says they have to move away after Ocwen layoffs

WATERLOO (KWWL) –Shannon Walderbach showed up to work Wednesday morning at Ocwen Financial in Waterloo thinking nothing of it, until she, along with 50 others, were pulled into a meeting.

“We’re all thinking, ‘OK, so we don’t do meetings anymore, like big group meetings, so looks like a layoff,'” said Walderbach.

Walderbach survived three different layoffs and really thought she’d seen the end of it for a while.

This layoff came almost a year after the company laid off roughly 238 employees.

She says the layoffs came because the company lost more than 200,000 loans.

While Ocwen tried to find some more loans to compensate, that deal fell though, so they had to make some cuts at the company.

“When they had us all together laying us off, I said, ‘Can you move us to other departments in the company? You know, what about that option?’ Because they had done that in the past, just laterally move them into customer care,” Walderbach said. “And they said, ‘Well, there’s not enough positions open for all of you.'”

Walderbach says her family of four is feeling the pressure to make ends meet in the Cedar Valley, and now think it’s time to move.

“We cannot make it with $9 an hour with all the medical bills, student loans, you know everything,” said Walderbach.

Read on.

New allegations against Ocwen

WZZM 13 has brought the stories of many West Michigan residents who claim to be a victim of fraud by the company.

Check out this story on WZZM13.com: http://www.wzzm13.com/story/news/investigations/13-on-your-side/watchdog/2014/11/18/new-allegations-against-ocwen/19254769/

Loan Servicer Busted for Backdating, But Foreclosure Victims Say Shenanigans Haven’t Stopped

On October 24, Ron Faris, CEO of Ocwen Financial, made an unusual move for the head of a $2 billion-a-year corporation: He apologized. Specifically, he sent out a mea culpa-filled open letter addressing the 2.7 million homeowners whose mortgages are serviced by Ocwen, apologizing for a glitch that backdated time-sensitive letters. “Letters were dated when the decision was made to create the letter versus when the letter was actually created,” Faris confessed. The missive came on the heels of well-publicized allegations by New York’s Dept of Financial Services (DFS) accusing the company of doing just that, and suggesting that the delayed loan modification letters may have resulted in foreclosures. At first, Faris claimed that only 283 New York homeowners had been impacted. However, he quickly retreated from that number after DFS said the number could be higher, way higher—perhaps in the “hundreds of thousands”—and not confined to New York.

The Faris letter was clearly damage control, an attempt to staunch the bleeding and send a message to the investment community following a Moody’s credit downgrade and a precipitous drop in Ocwen stock, which dropped to $19.04 on October 23 and fell again to $18.55 on October 27, the lowest price since June 2012.

This isn’t the first time that Ocwen has had to circle the wagons in response to jabs and uppercuts by New York DFS Superintendent Ben Lawsky, who’s developed a reputation as somewhat of a regulatory Popeye, taking on the servicing industry with a zeal matched only by Sen. Elizabeth Warren and a few other left-minded Congress members. Lawsky’s prime targets have been non-bank servicers like Ocwen—companies that saw a cash cow in the growing desire of mega-banks like Wells Fargo and Bank of America to shed their so-called “toxic” sub-prime mortgage portfolios in the wake of litigation and regulation from 2010’s “Foreclosuregate.” As Lawsky noted in an address earlier this year to the New York Bankers Association, these non-bank mortgage servicers have bought up a significant share of U.S. mortgages:

[In 2011, all of the ten largest mortgage servicers were traditional banks. Today, four of the top ten are non-banks. And those four non-bank firms alone service more than a trillion dollars of loans—10 percent of the residential mortgage market, and climbing.

Lawsky has held Ocwen’s feet to the fire over allegations of robo-signing and a failure to provide reviews of loan modification denials. In December 2012, DFS required Ocwen to install an independent monitor to ensure that the company adhered to promises to stop consumer-unfriendly practices. It’s questionable whether the monitoring is having the intended effect. Just this May, the New York Post reported that the company was trying to “gag” homeowners who wanted a loan modification approved, reportedly telling them not to complain to anyone—regulators or the press—or else. After DFS looked into the matter, Ocwen agreed not to enforce these gag orders.

Chris Wyatt, a mortgage servicing executive of 20 years turned homeowners’ advocate, says he’s seen many homeowners run ragged on Ocwen’s modification roller coaster. He’s heard complaints of all kinds: from inexplicable penalties and fees, to mortgage payments not applied by the due date, and hair-pulling accounts of time spent on the phone with customer service representatives trying to get anything resembling accurate information (I’ve covered some of this terrain in two previous In These Times pieces).

This spring, Wyatt shared his concerns about backdated communications with New York’s DFS and the federal Consumer Financial Protection Bureau (CFPB). It seems DFS took note, evidenced by its investigation. Samuel Gilford, a CFPB spokesperson, didn’t want to comment specifically on Wyatt’s communications, although there’s no doubt the bureau has an eye on Ocwen. In December 2013, after uncovering servicing shenanigans that included illegal foreclosures and unauthorized fees and penalties, the CFPB joined 49 state attorney generals and the District of Columbia in securing a consent order requiring Ocwen to provide homeowners with $2 billion in principal reductions and return $125 million to foreclosure victims. In a press release, CFPB said that Ocwen “took advantage of borrowers at every step of the process.”

Read on.

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.

Ocwen stock jumps on reports of Lawsky’s departure from NYDFS

Rumors of Benjamin Lawksy’s potential departure from the New York Department of Financial Services sent the stocks of Ocwen Financial (OCN) and its affiliated companies soaring Tuesday.

Ocwen has been in Lawsky’s sights since February, when when the NYDFS Superintendent put a $2.7 billion mortgage servicing rights deal between Ocwen and Wells Fargo (WFC) on an indefinite hold.

Read on.

Pennington v. Ocwen- New Foreclosure Case

Matt Weidner law blog:

New Foreclosure Case

MARK PENNINGTON, Appellant,

v.
OCWEN LOAN SERVICING, LLC, Appellees.

Case No. 1D13-3072.District Court of Appeal of Florida, First District.Opinion filed November 6, 2014.George Gingo and James E. Orth Jr., of Gingo & Orth, P.A., Titusville, for Appellant.

Curtis A. Wilson of McCalla Raymer, LLC, Tampa for Ocwen Loan Servicing, LLC, David D. Rottmann, Jacksonville, for Windsor Falls Condominium Association, Inc., Colleen Colton of Shapiro & Fishman, Boca Raton, Colin Paul-Anthony Blackwood of McGlinchey St, for Appellees.

ON MOTION FOR CLARIFICATION

PER CURIAM.

We grant Appellant’s Motion for Clarification, withdraw our previous opinion filed on September 16, 2014, and substitute the following opinion in its place.

Appellant, Mark Pennington (“Pennington”), appeals the final judgment offoreclosure against him and in favor of Appellee, Ocwen Loan Servicing, LLP (“Ocwen”). Because Ocwen failed to establish its standing to foreclose, or to refute Pennington’s affirmative defense contesting standing, we reverse and remand for the trial court to enter judgment in favor of Pennington.

In April 2007, Pennington executed a promissory note and mortgage on his condominium. The note was “payable to order” under section 673.1091, Florida Statutes, because it specifically named E.Q. Financial, Inc., the lender, as payee. § 673.1091, Fla. Stat. (“A promise or order that is payable to order is payable to the identified person.”). Mortgage Electronic Registrations Systems, Inc. (MERS) acted as nominee on behalf of E.Q. Financial. The note did not have any indorsements, but attached to the note was an allonge, which made the note payable to Countrywide Home Loans, Inc. The allonge was a special indorsement because it named a specific payee: Countrywide. See § 673.2051(1), Fla. Stat. As such, negotiation of the note required both possession and an indorsement by Countrywide. Id. (A specially indorsed negotiable instrument “becomes payable to the identical person and may be negotiated only by the indorsement of that person.”).

In January 2009, MERS purported to transfer the mortgage and note to Ocwen. Countywide was not involved. When Pennington failed to make payments, Ocwen filed a May 4, 2009 complaint, initiating foreclosure proceedings against him. After the filing of the complaint, Ocwen assigned the note and mortgage to Federal Home Loan Mortgage Corporation (Freddie Mac), who eventually assigned it back to Ocwen. This final re-assignment back to Ocwen failed to transfer the note.

Throughout his pleadings, as well as at trial, Pennington asserted the affirmative defense of lack of standing, arguing that Ocwen was not entitled to enforce the note. Ultimately, however, the trial court entered the instant order in favor of Ocwen.

We review the sufficiency of the evidence to prove standing to bring a foreclosureaction de novo. Lacombe v. Deutsche Bank Nat’l Trust Co., 2014 WL 5139296 (Fla. 1st DCA Oct. 14, 2014). A plaintiff who is not the original lender may establish standing to foreclose by submitting a note with a blank or special indorsement, an assignment of the note, or an affidavit otherwise proving his status as holder of the note. Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013); see also Mazine v. M & I Bank, 67 So. 3d 1129, 1132 (Fla. 1st DCA 2011) (“To establish standing to foreclose, it must be demonstrated that the plaintiff holds the note and mortgage in question.”). Standing must be established at the time of the filing of theforeclosure action. Focht, 124 So. 3d at 310. Additionally, a bank must also have standing at the time final judgment is entered. See Boumarate v. HSBC Bank USA, N.A., 109 So. 3d 1239, 1239 (Fla. 5th DCA 2013); Beaumont v. Bank of New York Mellon, 81 So. 3d 553, 555 (Fla. 5th DCA 2012).

In this case, Ocwen failed to demonstrate it had standing to enforce the note. Its exhibits did not qualify as an indorsement from Countrywide to Ocwen or as an assignment from Countrywide to Ocwen (while Ocwen submitted a copy of a letter it had written to Pennington informing him of an assignment from Countrywide to Ocwen, the actual assignment itself was never produced). And while Ocwen filed an affidavit of lost note alleging it was the lawful owner of the note so as to establish standing at the time the lawsuit was filed, see McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 174 (Fla. 4th DCA 2012) (“[I[f the affidavit itself is executed before the lawsuit is filed, the allegation that the plaintiff is the `owner and holder of the note’ is sufficient to establish the plaintiff’s standing at the inception of the lawsuit[]”), that affidavit was a nullity since negotiation of the note required not only possession, but an indorsement from Countywide to Ocwen. See § 673.2051(1), Fla. Stat. But such was lacking here. Likewise, the record contains no proof by Ocwen that it had standing under any of the means established by section 673.3011, Florida Statutes. See Mazine, 67 So. 3d at 1130. Because Ocwen failed to establish standing either at the time of filing the suit or at the time of judgment, the trial court should have granted Pennington’s motion for involuntary dismissal for lack of standing.

While this issue is dispositive, we also note that Ocwen’s problems were further compounded when the final assignment from Freddie Mac to Ocwen was only for the mortgage; Ocwen’s own records custodian admitted this below. Notwithstanding the lack of evidence to prove the Countrywide assignment, even if Ocwen had standing at the commencement of the suit, it would have lost such standing when it was no longer legally entitled to own or enforce the note. See Lindsey v. Wells Fargo Bank, N.A., 139 So. 3d 903 (Fla. 1st DCA 2013).

Accordingly, we REVERSE the judgment below, and direct the trial court to enter final judgment for Pennington.

Lawsuit targets Ocwen over fees, seeks class action

(Reuters) – Mortgage servicer Ocwen Financial Corp faced a lawsuit this week over accusations it committed fraud by overcharging borrowers in order to drive up its own profits, according to a court filing.

The case, filed on Wednesday in a California federal court, was brought by a borrower who said Ocwen charged him fees for an escrow account he never authorized. It alleges several claims, including civil racketeering, as well as unspecified damages and seeks class action status.

Read on.