[Update 1: Ocwen reaction added.]
Ocwen Financial (OCN) reached an agreement with the New York Department of Financial Services, saying that it would stop using gag orders on mortgage modifications.
"In discussions with our Department, Ocwen has agreed to no longer seek gag rules as part of settlement agreements or loan modifications with borrowers,” Benjamin Lawsky, superintendent of Financial Services, said.
“Additionally, the company has stated it will not enforce gag rule provisions in existing agreements. We are gratified that Ocwen worked constructively with us to resolve this matter, and our Department intends to review this issue at other financial institutions,” Lawsky added.
When HousingWire spoke with Ocwen in May, John Britti, who was recently promoted to chief investment officer from executive vice president and chief financial officer at Ocwen, said, “Ocwen does not require non-disparagement clauses in mortgage loan modifications in the absence of any borrower legal claims, which is the case in the overwhelming majority of our modifications.”
Britti did note, “In the rare occasion where there is a legal dispute – and these represent only a fraction of one percent of the loans in our portfolio – more often than not we are able to work out an amicable resolution with the borrower. In those cases, we generally request the settling party to agree to refrain from publicly disparaging the company in the future.”
And it is this point that Ocwen is fixing.
“To clarify, Ocwen has never required non-disparagement clauses for mortgage modifications. Our agreement with the DFS deals with the highly unusual situation where there is a legal settlement agreement with a borrower, representing a fraction of one percent of our portfolio," Britti said in a statement on the matter.
"In addition to deleting non-disparagement clauses in any future legal settlements, we have likewise assured the DFS that we will not seek to enforce such clauses that are included in existing settlements,” he added.