Ocwen Issues Blistering Response to Investor Notice

first_img in Daily Dose, Featured, News, Servicing Share January 26, 2015 803 Views Ocwen Issues Blistering Response to Investor Noticecenter_img Atlanta-based mortgage servicer Ocwen Financial has responded to a Notice of Nonperformance filed on Friday by law firm Gibbs & Bruns on behalf of investors, accusing them of pushing homeowners to foreclosure.The notice accuses the servicer of failing to collect on 119 residential mortgage-backed securities trusts with an original balance of more than $82 billion. Gibbs and Bruns said in a public release on Friday that a “lengthy investigation and analysis by independent, highly qualified experts” turned up multiple instances of Ocwen’s failure to perform, including use of trust funds to pay borrower relief obligations through modifications on trust-owned mortgages; conflicts of interest with affiliate companies; failure to maintain adequate records and communications with borrowers; and “[e]ngaging in imprudent and wholly improper loan modification, advancing, and advance recovery practices;” among others. The firm said the trusts lost more than $1 billion as a result.Monday, Ocwen attorney Richard A. Jacobsen responded to the allegations with the following statement:  “Ocwen continues to be committed to meeting all of its servicing obligations in accordance with its contractual arrangements in the over 2,500 Trusts that it services, and in full cooperation and compliance with its industry regulators. Your clients, on the other hand, are asking Ocwen to turn its back on the Trusts as a whole, on the borrowers, and on public policy. Ocwen declines to do so and reserves all its rights and remedies.”Jacobsen said in his response that “Ocwen denies that there is any basis for default under the Trust agreements” and that the servicer would respond to the exhibits mentioned in the letter “at the appropriate time.” He further mentioned that the Gibbs & Bruns letter was “drafted in an inflammatory tone, with misleading content, and coordinated with media release so as to create wildy false impressions.”Ocwen’s response called the investors’ effort to stop loan modifications and push foreclosures on homeowners “ill-conceived” and state that “[w]hile knee-jerk foreclosures may redound to the special economic interests of your clients, they are not in the best interests of the trusts as a whole, not consistent with industry practice, and therefore prohibited under the servicing agreements.”Jacobsen wrote that Ocwen sought to service loans that were in the best interests of the trusts as a whole and not simply those that would benefit the investors economically.”Perhaps most egregious is your clients’ continuing objection to the principal reduction modification targets in the government’s national mortgage settlements with RMBS issuers and servicers,” Jacobsen wrote. “Indeed, Ocwen’s national mortgage settlement provides that such modifications shall be done subject to, and within the confines of, the servicing agreements.”Also on Monday, Ocwen issued a statement responding to similar allegations made by Blue Mountain Capital Management, a purported holder of notes issued by HLSS Servicer Advance Receivables Trust, by addressing the allegations in the letter directly with Deutsche Bank National Trust Company, the indenture trustee. Ocwen vowed in its response to “vigorously defend itself against the allegations in the letter.”Ocwen has had many well-publicized regulatory troubles in the last two years. The servicer ended 2014 with a $150 million settlement with the New York Department of Financial Services over claims that the servicer intentionally backdated hundreds of foreclosure notices in order to deny loan modifications to qualified borrowers. That settlement included the departure of chairman Bill Erbey, who founded Ocwen more than 30 years ago.On Friday following the Notice of Nonperformance filing, Ocwen reached a $2.5 million settlement with the California Department of Business Oversight to resolve claims that the servicer failed to comply with California’s Homeowner Bill of Rights. Investors Lawsuits Ocwen RMBS 2015-01-26 Seth Welbornlast_img

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